Ethical Performance
inside intelligence for responsible business


Laos project gets go ahead

March 2005

Finance for a huge hydroelectric dam in Laos has been recommended by the World Bank advisory panel despite an undercurrent of environmental objection.

The total cost of the Nam Theun 2 project is £1.3billion (£680m). The World Bank’s contribution would include $20million for social and environmental mitigation. The other financial backers are the Laotian government, the Asian Development Bank, the official French development agency and the European Investment Bank.

The backers believe that the scheme will allow one of the world’s poorest countries to earn income by selling electricity to neighbouring Thailand. One estimate puts the annual earnings from the dam at £2billion when it is on stream in 2009.

The project means, however, that about 6000 people will have to be resettled and the livelihood of 40,000 dependent on fishing in the Xe Bang Fai river, into which water will be diverted, will be disrupted. The World Bank has insisted that the consortium of financial backers must compensate all who are relocated by building homes and securing work for them. The government is also providing a biodiversity area, nine times the size of the dam, to compensate for the area being flooded.

There are nevertheless complaints that because the dam will affect people’s ability to fish and grow food the restitution is unrealistic. Possibly a more serious objection is that the project will deprive some people of adequate fresh water supplies.

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