{"id":20107713,"date":"2022-12-14T17:53:10","date_gmt":"2022-12-14T12:23:10","guid":{"rendered":"https:\/\/www.thethirdpole.net\/?p=107713"},"modified":"2022-12-22T20:31:31","modified_gmt":"2022-12-22T15:01:31","slug":"phou-ngoy-mekong-dam-laos-faces-economic-regulatory-hurdles","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/energy\/phou-ngoy-mekong-dam-laos-faces-economic-regulatory-hurdles\/","title":{"rendered":"Controversial Mekong dam in Laos faces economic and regulatory hurdles"},"content":{"rendered":"\n

The fishing village of Khoen Khen in southern Laos is a quiet place, nestled along the banks of the Mekong River and hemmed by a ridge of mountains. But tranquil as it may now appear, locals say they\u2019re waiting for a coming wave of construction that promises to uproot their village entirely.<\/p>\n\n\n\n

The 728-megawatt Phou Ngoy dam is one of a proposed cascade of nine dams on the mainstream of the Mekong<\/a> in Laos. Costing an estimated USD 1.96 billion according to the Mekong River Commission<\/a> (MRC), the dam is seen as a key expansion of the country\u2019s already burgeoning hydropower sector \u2013 a strategic economic pillar that experts say is exacting a steep environmental cost.<\/p>\n\n\n\n

Financial and logistical information around development of the Phou Ngoy dam, as with other hydropower projects in Laos, has been as murky as the Mekong itself. But the limited information that can be obtained suggests that the Phou Ngoy project has struggled with a lack of financial support, regulatory hurdles, and economic feasibility concerns.<\/p>\n\n\n\n

In the meantime, villagers at the dam site whom the Laos government plans to relocate for the project say they are in the dark about when they will have to vacate their homes.<\/p>\n\n\n\n

The Mekong River Commission and dams<\/span>
\n

The Mekong River Commission (MRC) is an intergovernmental organisation headquartered in Vientiane, Laos, which is tasked with promoting cooperative development of Southeast Asia\u2019s largest river. Its four member states are Cambodia, Laos, Thailand and Vietnam.<\/p>\n\n\n\n

Although it is purely advisory, the MRC is the main regulatory body for transboundary water issues in the region. The MRC\u2019s Procedures for Notification, Prior Consultation, and Agreement (PNPCA<\/a>) process is supposed to give all member countries an opportunity to consider plans for projects on the river and their implications for others dependent on the river\u2019s resources \u2013 an important hurdle that the Phou Ngoy dam has yet to clear.<\/p>\n\n\n\n

An MRC spokesperson confirmed to The Third Pole that the PNPCA process has yet to officially begin for the project, which MRC member states are still discussing, and that the Laos government has been asked to provide more information about the dam and its potential impacts. Usually, discussion before the start of the PNPCA process only takes a few months, but it \u201calso depends on the nature of the project as well as circumstances\u201d, according to the spokesperson.<\/p>\n\n\n\n

PNPCA approval does not guarantee that a dam will be built \u2013 but it can mark an end to the pre-construction approval process, given a project submitted to the MRC will have already received approval from the national government in question.<\/p>\n\n\n\n

Of the nine proposed projects on the mainstream of the Mekong in Laos, two dams have already been completed: the Xayaburi and Don Sahong dams. Seven dam projects, including Phou Ngoy, remain at varying points in the approval or pre-construction stages.<\/p>\n<\/div><\/div><\/div>\n\n\n\n

Ecological concerns<\/h2>\n\n\n\n

\u201cIt\u2019s probably the most worrisome dam development in Laos nowadays,\u201d says Brian Eyler, who tracks Mekong developments as director of the Stimson Center’s Southeast Asia programme.<\/p>\n\n\n\n

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Recommended<\/span><\/span><\/div><\/a>\n\n\n\n

Eyler and others have raised a chorus of alarm<\/a> about the proliferation of dams in Laos, saying the projects are fundamentally changing the ecological functions of the river basin by altering seasonal flows of water and sediment. Mainstream dams such as Phou Ngoy risk blocking key fish migration routes and otherwise impacting the Mekong\u2019s abundant natural fisheries.<\/p>\n\n\n\n

Eyler says the proposed siting of the Phou Ngoy project \u2013 just south of the Laos city of Pakse and about 100 kilometres north of the operational Don Sahong dam on the border with Cambodia \u2013 would effectively sever a key link between the upper reaches of the Mekong and vital floodplains<\/a> to the south.<\/p>\n\n\n\n

\u201cWe often compare the Mekong fish migration to the African Serengeti migration, in which people are enthralled to watch the wildebeests, zebras and other animals,\u201d he says. \u201cBut an even higher volume of animals is moving through that downstream portion of the Mekong \u2013 you just don’t see them because it’s underwater.\u201d<\/p>\n\n\n\n

\"Map<\/div>
Dams on the Mekong River, Laos \u2022 Map by The Third Pole<\/div><\/div><\/div><\/div>\n\n\n\n

The Phou Ngoy dam hits hurdles<\/h2>\n\n\n\n

Even if the Phou Ngoy dam receives all the necessary approvals to go ahead, technical experts familiar with the project say it has also been hindered by challenges in proving its economic feasibility.<\/p>\n\n\n\n

Thai developer Charoen Energy and Water Asia<\/a> (CEWA) is the main driver of the Phou Ngoy project. Hydroelectric trade publications reported in 2020 that CEWA had contracted with three major Korean firms<\/a> to start building the dam in 2022, with a completion target of 2029.<\/p>\n\n\n\n

\u201cThat is impossible, I think,\u201d says Yongpil Seo, country director of the Thai office of Doosan Enerbility<\/a>, one of the Korean partners, when asked about that target.<\/p>\n\n\n\n

Construction of the Phou Ngoy project was initially set to involve Doosan along with Korea Western Power<\/a> and the Korea Overseas Infrastructure & Urban Development Corporation (KIND<\/a>) \u2013 a state-owned enterprise.<\/p>\n\n\n\n

CEWA business development manager Nanthaphan Hansarphiphat declined to comment on the project, stating that he needed a consent letter from the Laos government to do so. Eventually, an official at the Laos Department of Planning and Cooperation offered The Third Pole a brief explanation of its status via a messaging app. \u201cStill the same, not much progress. Project development agreement stage,\u201d the official texted.<\/p>\n\n\n\n

\"Aerial<\/div>
This photo, taken in December 2016, shows construction of a hydropower station in Luang Prabang province, northern Laos (Image: Liu Ailun \/ Alamy)<\/div><\/div><\/div><\/div>\n\n\n\n

CEWA, founded in 2007, is part of the sprawling Thai conglomerate CP Group, which enjoys a close relationship with that country\u2019s royal family and Beijing. The group controls major agribusiness holdings and is chaired by Chatchaval Jiaravanon, a member of the Chearavanont family \u2013 one of the wealthiest families in Asia. The company\u2019s website lists no other hydropower project<\/a>, suggesting the major dam at Phou Ngoy would be its first.<\/p>\n\n\n\n

KIND project developer Joonyoung Jeon told The Third Pole that his firm and Korea Western Power signed a two-year memorandum of agreement with CEWA in 2020 to work on the project. However, Joonyoung says the companies \u201cdid not secure the actual right to participate\u201d before the agreement expired in August 2022. Doosan and Korea Western conducted due diligence and value engineering procedures but ran into \u201cuncertainty about business feasibility.\u201d<\/p>\n\n\n\n

\u201cDiscussions with the MRC are being delayed on environmental issues, and it is difficult to secure the economic feasibility of the project due to the increase in [engineering, procurement, and construction] costs due to the recent inflation,\u201d Joonyoung says. \u201cIn my opinion, now it is difficult to solve.\u201d<\/p>\n\n\n\n

Yongpil from Doosan said he thought it was \u201cunlikely\u201d the Korean partners would continue with the project, adding he believed CEWA is currently looking for lower-cost Chinese partners and is struggling to find investment.<\/p>\n\n\n\n

Shaky economics<\/h2>\n\n\n\n

Without a pre-arranged buyer of the electricity produced by a hydropower project, development may founder in the face of high construction costs.<\/p>\n\n\n\n

\u201cThe feasibility, the reason for the electricity, is not there,\u201d says Pai Deetes, regional campaigns and communications director for Southeast Asia at the non-profit International Rivers, pointing to Thailand\u2019s already high energy surplus<\/a>. \u201cFor Phou Ngoy, we haven\u2019t heard of a plan to import electricity to Thailand yet, but we don\u2019t know. Without it, that project wouldn\u2019t be alive, because there is no guarantee for the income.\u201d<\/p>\n\n\n\n

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Deetes says the most important step for dam projects in Laos to get off the ground is obtaining a power-purchase agreement (PPA) with the Thai state enterprise Electricity Generating Authority of Thailand (EGAT<\/a>). Such agreements secure a long-term deal to buy hydroelectricity for decades at set rates that hydropower critics have described as sweetheart deals<\/a> for the industry.<\/p>\n\n\n\n

To date, no such PPA appears to be in place for the Phou Ngoy dam.<\/p>\n\n\n\n

\u201cOnce you get the PPA, the project is alive \u2013 you\u2019ll be able to get loans, to start construction properly, and your income will be guaranteed for the life of that PPA, like 29 or 35 years depending on what you negotiate,\u201d Deetes said.<\/p>\n\n\n\n

Locals await displacement for the Phou Ngoy dam<\/h2>\n\n\n\n

The residents of Khoen Khen village are among those who will be the most immediately affected if the Phou Ngoy dam is built. The 817 residents of the fishing village have been waiting for almost three years for their cue to pack up and get out.<\/p>\n\n\n\n

Khoen Khen has been tapped for total relocation to make way for the dam\u2019s construction. Though the facility is planned as a \u2018run of the river\u2019 dam, without a major reservoir, the villagers say they were told by Champasak provincial officials three or four years ago that they will be moved to facilitate the construction process.<\/p>\n\n\n\n

\u201cI don\u2019t want to leave, but if it\u2019s necessary for the government, I\u2019ll do it,\u201d says Khamla, a village resident. \u201cMostly the villagers around here are not satisfied, but if it\u2019s necessary for development, we can\u2019t say no,\u201d she adds.<\/p>\n\n\n\n

I\u2019d like to have more information about the dam, the plans for everything. It would help us to figure out what\u2019s next.<\/blockquote>Chanda, a Khoen Khen resident<\/cite><\/div><\/div>\n\n\n\n

Residents of Khoen Khen mostly make their living by fishing on the river, but they also farm nearby plots and gather wild goods in the mountains, like woody vines which they use to make handicrafts. Those who spoke to The Third Pole seemed content with their livelihoods and were reluctant to move.<\/p>\n\n\n\n

\u201cThe villagers do not want to move. They were born here, live here, have their lives here,\u201d says Sonexay, another resident of the village. He explains that the state promised to give residents new jobs if necessary after they relocate, and to offer as a choice between two possible sites for the new village location. He says locals are sceptical about these new jobs, but hope they will be fully compensated by the developer for the loss of their property, if and when that day comes. \u201cVillagers were promised they would have a better life. But they don\u2019t expect that \u2013 they just don\u2019t want worse,\u201d he says.<\/p>\n\n\n\n

News of the project\u2019s uncertain backing seems not to have reached the community.<\/p>\n\n\n\n

\u201cIf we need to move or start again, it would be very difficult for us,\u201d says Chanda, a Khoen Khen resident. \u201cI\u2019ve lived here [in the village] for about 30-40 years, and I was born not far from here. I\u2019d like to have more information about the dam, the plans for everything. It would help us to figure out what\u2019s next.\u201d<\/p>\n\n\n\n

Some names have been changed.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

As locals await relocation and environmentalists raise concerns over impacts on the Mekong\u2019s ecology, the future of the planned Phou Ngoy dam looks uncertain<\/p>\n","protected":false},"author":20000283,"featured_media":20107745,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[757],"tags":[50040314,554,20000155,50040706],"hashtags":[],"country":[20028095],"class_list":["post-20107713","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-dams","tag-hydropower","tag-mekong","tag-migration","country-laos"],"acf":[],"yoast_head":"\nControversial Mekong dam in Laos faces economic and regulatory hurdles<\/title>\n<meta name=\"description\" content=\"As locals await relocation and experts raise concern over impacts on the Mekong\u2019s ecology, the future of the Phou Ngoy dam looks uncertain\" \/>\n<meta name=\"robots\" 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