New Policy Proposed on Hydropower Development in Lao PDR Puts Developers' Interests First

Tania Lee

From December 4th-5th, the Government of Laos' Department of Energy Policy and Planning (DEPP) of the Ministry of Energy and Mines along with the International Finance Corporation (IFC) convened a public meeting on the proposed Policy on Sustainable Hydropower Development(PSHD) at Settha Palace in Vientiane. The PSHD is a revision of the National Policy on Environmental and Social Sustainability of the Hydropower Sector (2005), aiming to include social, environmental, economic and regulatory aspects of building dams larger than 15 megawatts. It includes sections dealing with feasibility studies, economic and technical considerations, social and environmental impacts, information disclosure, public consultations, compliance monitoring and benefit-sharing. However, a number of sections of the text remains vague, with few commitments that meet basic standards promoted by many international institutions and development organizations working in Lao PDR, including adherence to respecting fundamental human rights (such as to housing and potable water), recognizing the importance of civic participation from the outset of project planning, corporate accountability, or revenue transparency.

The proposed wording of the new policy represents a retreat from the standards already embraced existing in the 2005 policy and current decrees related to environmental impact assessments, compensation and resettlement (Decrees 112 and 192, both of which are also under revision).The entire policy framework is based on prioritizing the damming of rivers for hydropower, rather than meeting the basic needs of people. Instead of recommending strategic impact assessments to better evaluate the pros and cons of each project, it promotes the vision that projects are to be quickly and efficiently advanced through the planning and implementation stages, making it unclear how economic costs and benefit consideration, and the future well-being of affected communities, as well as of entire river basin ecosystems, will be genuinely taken into account. It therefore effectively acts to undermine the basic social and environmental safeguards promoted by the very donor countries and multilateral development institutions that are sponsoring this process of policy revision.

Public Consultation Process Becomes Exclusionary

The invitation to the forum at the Settha Palace and the proposed text for the new policy (set to replace the current National Policy on Environmental and Social Sustainability of the Hydropower Sector) was circulated to non-governmental organizations (NGOs) less than a day before the actual forum. There were also no guarantees of a safe process of consultation that would allow for anyone raising concerns or questions at the meeting to be assured of their personal security from possible repercussions afterward. Consequently, the number of participants from the government and hydropower sector far outnumbered the few NGO representatives present. This meant that the space for NGOs to bring forward unique insights based on their diverse perspectives on partnerships with rural communities, overcoming underdevelopment, and advancing environmental stewardship was highly constrained.

However, for the NGO representatives present, the meeting convened in the nation's capital on December 4-5th did offer insights into the perspectives of hydropower developers and government officials on the policy. Government representatives from a number of different ministries both at the national and provincial level participated in the forum. When questioned by an NGO representative about why the policy didn't meet basic environmental safeguard standards identified by the International Finance Corporation, World Bank and Asian Development Bank, one national official from the Ministry of Mines and Energy responded that since Laos is a developing country, it can't afford to meet basic standards to safeguard people and the environment. One national official also explained that resettlement of entire villages to make way for big projects like hydopower dams presents no problems because families can move easily from one place to another, since their houses are just made out of temporary materials, not permanent structures like ones in the city.

The Xekaman 1 Dam in southern Laos is under construction. Displaced villagers are living in temporary relocation zones for over a decade, without due compensation and housing support.
The Xekaman 1 Dam in southern Laos is under construction. Displaced villagers have been living in temporary relocation zones for over a decade, without due compensation and housing support.
Credit: International Rivers

Provincial authorities from Champasak and Bolikhamxay brought a slightly different perspective, as they expressed concern that due to dams, people are being moved onto land that is already claimed by other villages or onto temporary resettlement zones with little certainty about the future. They said that even though dam companies want to make profits, more planning is needed to support displaced people in recovering from the changes, pursuing sustainable livelihoods and gaining from the benefits of revenues generated.

Hydropower developers who were present included executives from companies building dams that will affect the Mekong mainstream and tributary rivers. Some developers explicitly raised the point that because the technical equipment for dams is expensive, they will try to ensure it lasts for the period of the concession agreement, but after the concession agreement ends, so do their commitments. For example, if the turbines or other mechanical parts fail, or there are pending crises of potential equipment failure after the initial concession agreement timeframe, it is the government and Lao people who will have to respond to the consequences. They also told the government representatives that Lao regulations ensuring payments, compensation and housing for local communities should be relaxed because it results in a cut to their profits. Ironically, however, the reality is that in a regional and global context, Laos has a comparatively flexible framework that often favors hydropower developers at the expense of affected communities.

 Making the Concerns from Dam-Affected Areas in Lao PDR Heard

Although representatives of dam affected communities, such as those living on the Hinboun and Xe Bang Fai rivers, had no opportunity to come to the forum at Settha Palace, a few NGO representatives made their presence felt. Together, we raised a number of questions about the process and policy being developed. For example, we asked for more specific planning procedures to be included in the policy, in order to ensure project options have been assessed at the pre-feasibility stage, that basic needs of people to water be prioritized, and that there be plans in place for the foreseeable ending of the concession agreement, as well as possible decommissioning. We asked if 'project-affected people' could not just be vaguely or narrowly defined, but rather clarified so that it would include all people in the project area of influence, meaning not only those who have been displaced by the dam, but also people living upstream, downstream and in catchment areas, as well as those affected by associated facilities, and those whose assets, properties, livelihoods, cultures, and non-material resources are affected.

We emphasized that the policy should mandate that compensation be paid before the dam begins operating, and that losses should be accounted for during assessments of additional reparations over the course of the project cycle. We asked for the policy to be clear about how public disclosure and consultation with affected villages should happen, so that all project-affected people will have the opportunity to give input during the project cycle, from the pre-feasibility stage onwards. We stated that those affected should also have access to a functioning grievance mechanism without consequences of retribution. Finally, we suggested that the worthwhile but vague notion of “benefit sharing” of project revenues be clarified within the policy to specifically identify the primary beneficiaries as those living within the project area of influence, and secondly, the need for the terms of the benefits to be negotiated from the early stages of the project cycle.

It remains to be seen how much our perspectives will be reflected in the new Policy on Sustainable Hydropower Development in Lao PDR. However, by bringing these concerns forward, despite the context of constrained and limited opportunities for genuine consultation, the onus is now on the Lao Government and development partners involved to take heed. The future of hundreds of thousands of Lao people affected by dams operating, under construction and being planned depends on it.

International Rivers written submission elaborating these concerns and others can be downloaded here.

Monday, December 23, 2013