As plans go ahead for construction of the US$3.5 billion (107 billion baht) Xayaburi Dam along the Lower Mekong, critics warn that the dam would irreversibly change the ecology of the Mekong River, threaten fisheries and pose risks to the food security and livelihoods of millions of people. The dam is also bringing renewed attention on the lack of transparency and dubious energy planning by the Electricity Generating Authority of Thailand (EGAT).
In September 2010, the Lao People’s Democratic Republic petitioned the Mekong River Commission (MRC) to begin the formal process of approving the first of 11 proposed dams across the lower Mekong. This initiated the required procedure for all such projects as stipulated in the MRC agreement signed by all members in 1995. According to the agreement, development projects with potential transboundary impacts should be subject to review and consultation between all states before proceeding.
The Xayaburi Procedures for Notification, Prior Consultation and Agreement (PNPCA) process officially started on 22 October 2010. From this point to the final decision, the consultation process should take 6 months, but can be extended if necessary. MRC Joint Committee Members expect to reach their conclusion on the Xayaburi proposal on 19 April 2011 – Tuesday next week.
The Government of Laos (GoL) signed a Project Development Agreement with Thailand’s Ch. Karnchang in November 2008. A Memorandum of Understanding for a Power Purchase Agreement was then signed between the Electricity Generating Authority of Thailand (EGAT) and the GoL in July 2010 to allow EGAT to purchase 1,220 MW of electricity at a cost of 2.159 Baht per kilowatt-hour through a 200 kilometer long transmission line that will travel from the Xayaburi Dam to Thailand’s northeastern province of Loei (see here).
During a recent meeting of an MRC working group, officials and independent experts from member countries, including Thailand, reviewed documents submitted by the Lao government as part of the commission’s review of the project.
In order to identify and assess these implications, the MRC had commissioned a 14-month Strategic Environmental Assessment (SEA) process of the mainstream Mekong dams presenting the results in the consultants’ Final Report (available here). The independent panel’s experts have said that the dam, with an average discharge rate of about 5,000 cubic metres per second, would slow water flows and this would increase sedimentation on the river bottom and could also impact fisheries. The MRC experts also noted that more than 200 species are found in this part of the river and the catch is estimated at 40,000 to 60,000 tonnes per year. The changes in the flow would likely affect fish habitats and life cycles.
International Rivers, an NGO opposing the dam, warn that despite its designation as a run-of-the-river plant, the dam could create a flood area that could cover as much as 90 square kilometers. The dam would flood 2,500 rural households in 28 villages near the dam site and directly affect over 202,000 people.
The SEA says that combined the Xayaburi and other planned dams would create direct costs: reduced fisheries, inundation of riverbank gardens, and loss of nutrients for floodplain agriculture that could be equivalent to US$500 million/year. The SEA consultant team specifically recommends that a “10-year deferral be placed on mainstream hydropower development … to ensure that the necessary conditions to strengthen understanding of the natural systems as well as management and regulatory processes are conducted effectively”.
The governments of Vietnam and Cambodia have raised concerns over the transboundary impacts but the question is how far either government would go to halting or postponing the dam.
The Vietnam National Mekong River Committee has warned that the amount of fisheries of Vietnam will decline by 200,000-400,000 tons per year due to negative effects from the dam. Nguyen Thai Lai, Vietnam’s Deputy Minister of Natural Resources and Environment, said the exploitation of water resources would affect all communities living along the river, including the Vietnamese community. “Investors said the dam is not harmful to the environment since it first uses river water and later release that water to the river. However, the dam’s operation will actually divert the flow of the river and will have certain impacts on the ecosystem,” he said.
In Thailand, river-dependent communities and civil society groups have repeatedly warned about the dam’s ecological impacts. But as the intended market for the electricity generated by the Xayaburi Dam, Thailand appears keen to protect the interests of its influential energy utility, the Electricity Generating Authority of Thailand (EGAT). EGAT dominates power planning and development in Thailand; it owns just under half of Thailand’s total generation capacity with the remainder provided by Independent Power Producers (IPPs). EGAT is also a major shareholder in several major IPPs, including the Electricity Generating Company of Thailand (EGCO) (25%) and Ratchaburi Electricity Generating Holding Company (45%) (see here).
With slumping domestic business in recent years, Thai developers hoping to build Xayaburi such as Ch. Karnchang, Thailand’s second largest construction company, have said investments in regional energy projects are core to their business strategies. Their efforts are backed by Thailand’s “power development plans” (PDP) that seek electricity imports from neighboring countries. Moreover, Thailand’s commercial banks, including Bangkok Bank, Bank of Ayudhya, Kasikorn Bank, Krung Thai Bank, Siam City Bank, Siam Commercial Bank, Thai Military Bank, and Thanachart Bank, are more than willing to support regional energy projects. In Laos in particular - despite the recent attention given to China - Thai capital continues to be a critical factor, as investment and trade data repeatedly shows.
Thailand’s PDP is part of the regional energy problem, say Thai energy critics, as it heavily promotes the development of new large-scale electricity generation plants, such as fossil-fuel fired power stations and hydropower dams, increasingly locking Thailand and the region into a “centralized electricity supply model” (Greacen and Greacen 2004). Critics also argue that Thailand’s existing energy plans mostly serve the interests of the state-owned electricity utility, energy companies, and the construction industry, rather than the needs of the region’s electricity consumers.
EGAT’s load forecasting in the past has been known to go spectacularly wrong. The Thai electricity load forecast assumes that Thai demand for electricity will be growing at an average of over 2000 MW per year through the year 2021, and growing exponentially. But in the past 15 years, load growth has averaged only 770 MW per year. For the past 10 years, it has averaged only 715 MW per year. The mismatches between official demand projections and reality reached such high levels that an independent Senate committee on anti-corruption was set up to investigate EGAT’s load forecasting process (Greacen and Greacen 2004; Middleton 2010).
Even as the Xayaburi dam is set to pose severe long-term damage to the Mekong River and could affect millions of people and livelihoods, uncertainty also remains over how it would affect future electricity rates and benefit the paying customers in Thailand.
The decision on 19 April could prove decisive for the future of the Mekong River: it can either continue the “business as usual” approach or mark an enlightened shift towards an era of transboundary cooperation that requires greater transparency in policy-making, better public participation, and integrated management of the Mekong’s resources to benefit local peoples.
Amraapali is a writer based in Bangkok (email@example.com)