Trouble on the Theun-Hinboun

Bruce Shoemaker
Wednesday, April 1, 1998

A Field Report on the Socio-Economic and Environmental Effects of the Nam Theun-Hinboun Hydropower Project in Laos

This landmark publication by International Rivers Network was the first report to document the serious impacts of the Theun-Hinboun Hydropower Project on affected communities. The researcher interviewed 60 people in 10 villages on a three day visit to the project area in early March 1998, just months after the project started operation. What was particularly striking about the visits to villages in the project area--whether downstream in the Nam Kading, downstream in the Hai/Hinboun, or along the headpond--was that without exception they ALL reported experiencing various harmful effects from the project. In all three areas visited, villagers reported substantial declines in fish catches. These declines ranged from 30% to 90%. Villagers also reported being impacted by the loss of riverbank vegetable gardens, the loss of dry season drinking water sources, and transportation difficulties. In some areas, villagers must relocate their homes and do not feel they are receiving adequate assistance with this process.

The researcher also found that the thousands of Lao citizens now suffering harmful impacts from the Theun-Hinboun project are not receiving direct compensation for their losses and there are no plans to provide them with any such compensation in the future. Within the entire $260 million dollar project cost--which includes $2.59 million for a mitigation program--a total of only $50,000 has been allocated for all resettlement and compensation costs for affected local people. In fact, 67 per cent of the total mitigation budget went towards a re-regulating pond and modifications allowing for a downstream flow in the Theun River, costs which arguably should have been included as part of the project's basic infrastructure from the start. In October 1996, the Lao government, acting with legal advice from the ADB, signed a license agreement with the THPC which absolved the company from any further obligation to assist with mitigation or compensation measures for the life of the project.

Rather than addressing these issues, the ADB and the Theun-Hinboun Power Company (THPC) are trumpeting the project's success and refusing to acknowledge that these negative impacts on people's livelihoods are even occurring. No independent verification of whether even the small amounts of compensation now being provided are in fact reaching those affected has been made. No systems are in place to properly document the economic losses caused to local people. The THPC does not appear to even be making a sincere effort to discover what the real situation is in villages affected by the project.

A first step in addressing the concerns mentioned above might be for the project's public financiers--NORAD and the ADB--to sponsor an extensive and comprehensive independent examination of the points that have been raised in this field report. Such an examination could be the initial stage in providing redress to those Lao citizens currently being harmed by the project. As these harmful impacts are being experienced right now to people with extremely limited economic reserves or alternatives, this process should occur as quickly as possible.

It is clear that the company should take responsibility for their share of the true costs of the project, costs that were ignored or downplayed by a consultant company owned by one of the outside shareholders during the project formulation period. Given this poor process, there may well be a legitimate legal argument that the concession agreement should be renegotiated to require the foreign shareholders to pay their fair share of the compensation costs. The ADB also bears responsibility for assisting in resolving these problems as it has firm policies in place stating that people should not be allowed to be left worse off than before due to the impacts of an ADB financed project. The researcher is hopeful that the responsible Lao government authorities, when they fully understand the serious negative impacts occurring to many of their country's citizens, also will want to move quickly to solve these problems and bring justice to the affected people.