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World Bank Starts Consultations on Dam Project in Laos - 2004-08-31

The World Bank has kicked off a series of consultations Tuesday to debate the viability of building a huge hydropower project in impoverished Laos. Proponents say it will help alleviate poverty in the tiny landlocked nations. But critics argue the dam will harm the environment and displace thousands.

The first World Bank seminar, held Tuesday in Bangkok, brought together government officials, environmentalists, and private companies where the pros and cons of the dam project were discussed.

Laos wants the Nam Theun Two Hydroelectric $1.3 billion project to go ahead because revenues could help bring the small communist nation out of poverty. Thailand has already signed a $5 billion contract to buy electricity produced by the dam over a 25-year period.

World Bank spokesperson, Kimberly Versak, says the Laos government clearly laid out its reasons for the controversial project. "They think this is a good alternative to actually achieve some growth and get some revenues that they can use for poverty and conservation. And obviously the bank wants to help Laos," she says. "Again, everyone knows it's a risky project and there are a lot of people who don't think it should go forward. But I think the bank is still very much weighing the options."

Critics argue the hydroelectric plant will be similar to another World Bank-backed dam in northeast Thailand, which brought environmental disaster to the area.

The 50 meter high dam is to be built about 250 kilometers northeast of Vientiane on the Nam Theun River.

Environmentalists are concerned the dam will hurt wildlife - as the Nakai Plateau will be inundated with water. The area is home to one of Southeast Asia's largest concentration of elephants.

In addition, more than 5,000 people will be displaced to construct the dam.

The World Bank's Kimberly Versak says this is one of the most openly debated projects of its kind and the final decision will be fair. "Developing countries still very much need basic infrastructure - anywhere from roads to power projects to dams," she says. "But they still need these things and provided they are done in an environmentally and socially sustainable way ? the bank still believes that it has a role to play in this."

An international consortium of investors plans to build the dam by 2009 with the World Bank stepping in as the political risk guarantor.

The World Bank has made its support of the project conditional saying it must meet strict environmental and social criteria.

A decision has to be made on the project by May 2005 to allow construction to begin on time. The World Bank will continue with consultations in Tokyo, Paris, and Washington before ending in the Laos capital of Vientiane on September 24.