Uncovering the Mekong Region’s New Dam Proponents

Carl Middleton
Friday, December 10, 2010

In the Mekong region, ongoing economic growth despite the global economic crisis continues to drive a push for extensive dam-building. Since we last reported on the Mekong region's new dam builders from Thailand, Vietnam and China in 2007, these developers have proposed even more ambitious and controversial projects, including a cascade of 11 dams on the Mekong River's mainstream (see "New Report Urges Ten-Year Dam-Building Freeze on Mekong"). Climate change is increasingly cited as a justification for dam building, as is a serious drought and then floods that have ravaged the region this year.

Importing Power, Exporting Costs

Plans for extensive hydropower development are nothing new to the Mekong region, yet the decades of regional conflict prevented many large dam projects from proceeding. As peace returned in the early 1990s, plans for extensive dam construction were revived. These plans are shaped by growing political cooperation between the Mekong countries, and aspirations for a regional transmission grid fueled largely by hydropower projects (a plan originally conceived by the Asian Development Bank).

The massive financial flows pouring into infrastructure and other investment projects throughout the Mekong region from Thailand, Vietnam and China is increasingly marginalizing the Asian Development Bank, the World Bank and Western donors that at one time were the region's principal hydropower proponents. Even without the development banks, hydropower remains high on the agenda of the region's governments.

Massive Hydropower Potential

Thailand's government estimates that electricity demand in Thailand will approximately double to 65,600 megawatts (MW) by 2030. Vietnam, one of the world's fastest growing economies, predicts its demand will triple to 69,500 MW by 2020. Burma, Cambodia and Laos have more modest domestic demand growth predictions, although all governments have committed to urgently develop electricity infrastructure. These government projections are challenged by civil society groups who argue that improved power planning and pursuing energy efficiency and renewable and decentralized energy projects is the best way forward, not the business-as-usual mega-projects proposed by the governments.

Thailand, which has already developed much of its domestic hydropower potential and faces stiff opposition to further projects at home, plans to import at least 14,000 MW of hydroelectricity from neighboring Burma, Laos and Yunnan Province over the coming 15 years. Vietnam plans to develop almost all of its viable hydropower over the next 20 years, totaling at least 17,000 MW, as well as importing electricity from Cambodia, China, and Laos. Responding to this demand, the governments of Burma, Cambodia and Laos are keen to develop their relatively unexploited hydropower potential for both electricity export, which would earn these governments foreign currency, and domestic demand.

The New Dam Proponents

As the new century dawned and new economic realities and political relationships emerged, private-sector hydropower developers from Thailand, Vietnam, China, Malaysia and Russia picked up the hydropower plans that were abandoned by Western companies during the 1997 Asian financial crisis. These developers are now proposing dozens of projects throughout the region, bringing with them the support of financiers from their own countries, and are often backed by influential political players and their governments' bureaucracies.

Project developers from Vietnam include the state-owned utility Electricity Vietnam (EVN), and Song Da Corporation, Vietnam's largest construction company. They are building tens of dams in Vietnam and several more in Laos that will export power to Vietnam. Dam developers from China include the world's largest dam builder, Sinohydro Corporation , and China Southern Power Grid (CSG). These and other Chinese dam builders have tens of projects under construction or under consideration in Burma, Laos and Cambodia for the domestic and regional power markets.

Thailand's electricity utility, EGAT, is a state-owned enterprise that dominates power planning and development in Thailand. It has increasingly favored importing power from neighboring countries. Several of Thailand's largest independent power companies, including the Electricity Generating Company of Thailand and Ratchaburi Electricity Generating Holding Company, have stated that investing in regional energy projects is core to their business strategies. Thailand's major commercial banks have proven to be willing backers of these regional dam projects. While most major Thai energy companies and Thai banks have committed to some form of corporate governance and corporate social responsibility on paper, in the case of the regional hydropower projects that they are involved in there is little evidence that they are seriously implementing these commitments in practice. These publiclytraded energy and construction companies and commercial banks are driven to maintain investor confidence and keep stock prices high, and therefore have a keen interest in promoting new large-scale power projects even where better energy options exist.

Many civil society groups have concluded that existing electricity plans mostly serve the interests of the electricity utilities, energy companies, and the construction industry, rather than the needs of electricity consumers. Yet, through community protests at individual project sites, NGO policy analysis of national energy plans, and regional civil society campaigns such as the "Save the Mekong" movement, these out-of-date and destructive dam plans continue to be doggedly challenged with the belief that a more sustainable and equitable energy future is possible.