Letters from the Mekong: Obstacles to Equitable Hydropower Development Planning

Stimson Spotlight

Letters from the Mekong: Obstacles to Equitable Hydropower Development Planning

Pressure from governments and commercial developers to build dams on the mainstream of the Lower Mekong is increasingly threatening to marginalize the Mekong River Commission (MRC), which is the sole regional organization that addresses water governance and coordination. The MRC’s role as a source of scientific and technical expertise and coordinator is vital: cumulative impacts of building even some of the proposed dams on the mainstream of the Mekong could risk the livelihoods of tens of millions of people, the productivity of the world’s most productive inland fishery, and the agricultural “rice bowl” of the Mekong Delta in Vietnam. Despite creating procedures for addressing disputes over projects — such as the Procedures for Notification, Prior Consultation, and Agreement (PNPCA), which requires countries to submit proposed projects on the mainstream of the Mekong for consultation — the MRC has been ineffective at resolving disputes because riparian countries have been unwilling to cede control over the basin.

The first test of the PNPCA in 2011 led to cautious optimism among observers when Laos announced that it would suspend construction on the 32.6-meter Xayaburi dam after failing to win acceptance of the project by Cambodia, Thailand, and Vietnam. However, Laos informed its downstream neighbors in 2012 that it had addressed their concerns by redesigning the sluice gates and fish ladder and would be moving forward with construction. In 2013, Laos argued that its second project, the Don Sahong dam, did not need to undergo the consultation and agreement phases of the PNPCA process because it would only block one channel of the river and did not count as a mainstream dam. Only after coming under intense criticism from Cambodia, Vietnam, and numerous civil society organizations did Laos announce in June 2014 that it would submit the project to limited informal consultation while construction continued.

Laos’ decision to move forward with the Don Sahong and Xayaburi dams despite objections from downstream countries has been the clearest imminent challenge to the MRC, but all Lower Mekong countries have contributed to the crisis. Thailand is both the principle source of funding for the Lao projects as well as the main purchaser of hydroelectricity. Cambodia is moving forward with the Lower Sesan II dam on the confluence of two major tributaries to the Mekong and is studying the feasibility of building two large dams across the mainstream of the Mekong. Vietnam has built numerous dams on major Mekong tributaries in the central highlands, which have negatively impacted both Cambodia and Vietnam’s own Mekong Delta. Each has argued that these are national projects, and thus far none has incorporated a full transboundary environmental impact assessment in its plans.

After making no headway on the dam projects via demonstrations, media, and letter-writing campaigns, or through MRC stakeholder and PNPCA consultations, NGOs began filing legal cases to try to accomplish the same result. In June 2012, 15 regional and international NGOs filed a complaint against Poyry — a Finnish consultant — for failing to meet OECD standards of corporate social responsibility in its work on the Xayaburi dam. In April 2014, the Northeast Community Network of seven Thai provinces in the Mekong basin filed a similar OECD complaint against Andritz, an Austrian engineering firm that will supply crucial parts for the project. In June 2014, Thailand’s Supreme Administrative Court accepted a case against the Electricity Generating Authority of Thailand for failing to fulfill constitutionally mandated social and environmental impact assessments prior to signing a purchase-power agreement for the Xayaburi dam.

These initiatives may be having some impact where protests failed: the day after Thailand accepted the case against the Xayaburi dam, Laos announced that it would accept limited consultation on the Don Sahong. Mega First Corporation Berhad, the developer for the project, has published online its reports on environmental and social issues surrounding the project and the steps it is taking to mitigate impacts. This new awareness among developers and other pro-dam stakeholders is shifting momentum away from the MRC and into the realm of law, political risk, and corporate social responsibility.

While the shift to addressing issues via the legal route may produce some impact, it is vital that the MRC maintain its role as an arena of dialogue and negotiation at the policy level. This means that riparian -countries and international observers should be forward looking and focus on concrete, cooperative steps. Opportunities for cooperation could include the following:

  • LMB countries need to revise and fully implement national environmental impact assessment (EIA) laws and regulations. These are a necessary first step towards more sustainable and comprehensive planning for EIAs. The most successful national laws and regulations could eventually become models for a regional Mekong Standard.
  • The MRC needs to urgently carry out the Council Study that was agreed upon in 2011 and provide further support to the Vietnam-led Delta Study. By taking a stronger leadership role in pushing the Council Study forward, the MRC will both reaffirm its relevance as well as provide much-needed baseline data for the basin.
  • The need for transboundary EIAs is paramount. The MRC’s inability to gain consensus among all members has led to a stalemate on transboundary EIA negotiations. This is both an obstacle to fully understanding impacts of individual projects as well as a risk factor for countries and companies seeking to develop hydropower: in the case of the Xayaburi Dam, for example, a thorough transboundary EIA would likely have helped shepherd the project through the PNPCA protocol because it would have better allowed Laos to prove that the impacts are not as serious as expected. A transboundary impact assessment can be a method of risk management for funders, dam developers, or government entities who are trying to gain approval of projects, while still benefiting civil society through creating baseline data and potentially galvanizing MRC negotiations over the transboundary EIA standards.
  • The Asian Development Bank, World Bank, and bilateral development aid donors need to engage Laos on the value of a national energy grid. Laos currently exports energy at relatively low prices in the north and then buys energy from Thailand in the south at a higher price. Building a national grid in Laos and connecting it into a regional grid — such as that proposed by the Asian Development Bank under the GMS framework — would allow Laos to build some dams in the north to meet demand in southern Laos more efficiently and then export the remainder. This would bring in badly-needed profits while avoiding the projects in southern Laos which would severely damage downstream fisheries.

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