Sizing up the Grid

Aviva Imhof, International Rivers
Saturday, October 30, 2004

Comparing the Mekong Power Grid to ADB Policies

The Asian Development Bank is promoting the development of a regional power grid and electricity trading system in mainland Southeast Asia fueled primary by hydropower. This initiative threatens to undermine the fragile Mekong River ecosystem that millions depend on for their livelihoods and survival. This paper examines the ADB's development of the initiative and its compliance with Bank policies and strategies.

The ADB envisions that China's Yunnan province, Burma and Laos – where hydropower potential is huge and community opposition is stifled – will generate cheap, reliable and environmentally sustainable power for growing markets in Thailand and Vietnam. An ADB-financed master plan recommends building transmission lines to connect a dozen proposed hydropower projects to these countries. This includes the controversial Tasang Dam in Burma, the Jinghong and Nuozhadu dams on the Mekong mainstream in China and the Nam Theun 2 Dam in Laos. Hydropower projects are also recommended for development on Cambodia's Se San River, China's Panlong River and rivers in central and southern Laos, among others.

By promoting the Mekong power grid, the ADB is lending considerable institutional support for hydropower development in the region. The ADB is encouraging governments to press ahead with ambitious hydropower plans and rallying public and private investors to finance projects. ADB policies state that such development should proceed through an open and transparent process with full public participation and full consideration of impacts to communities and natural resources. However, in this instance this is not the case.

Despite its grand scale and potentially far-reaching impacts, the ADB is leading the multi-billion dollar Mekong power grid initiative through a very poor process of development. This process has violated the ADB's own safeguard policies on energy, water and indigenous peoples. It has also contravened the ADB’s poverty reduction strategy, strategic environmental framework for the GMS and the recommendations of the World Commission on Dams. Some of the ADB policy violations are summarized below.

• The ADB has not consulted with affected people, project beneficiaries or other members of civil society in the region. They have been excluded from the development of this initiative.
• Ethnic minorities have also been excluded from the planning process. Impacts to ethnic minorities have not been assessed.
• The ADB has systematically ignored the initiative’s social and environmental impacts and has not proven that the initiative meets ADB environmental standards.
• Impacts to fisheries resources have not been thoroughly assessed.
• The ADB has failed to assess the cumulative impacts of the Mekong power grid or the hydropower projects it would support.
• The economic benefits of the initiative are marginal and have not been verified.

In addition, contrary to the international best practices standards set by the World Commission on Dams, the Bank has not comprehensively assessed the full range of options available to meet the energy needs of the Mekong region.

This paper includes background on the Mekong power grid, an analysis of how the ADB’s development of the initiative complies with Bank policies and strategies, and recommendations for the ADB.