World Bank May Pull Out of Laos Dam Project
	  id OAA27854; Thu, 9 Oct 1997 14:38:43 -0400


Via NY Transfer News Collective * All the News that Doesn't Fit

source: majordom@foe.co.uk  Sun Sep 28 09:55:54 1997


The Guardian (UK) September 24 1997

Damning Evidence:
World Bank may pull the plug on Laos dam, reports John Vidal.

Pressure to stop the massive $1.5 billion Nam Theun 2 dam in Laos is
mounting following the loss of financial confidence.

The project, which would export electricity to Thailand, can only go ahead
with World Bank guarantees of finance. However, an independent review of the
bank's economic impact study has found that it had "systematically
underestimated" risks and that there was "a very real possibility of Laos
ending up with no net economic benefit, losing its total investment and
incurring the environmental, social and opportunity costs." The study found
that the World Bank's worst-case scenario excluded any consideration of
sedmentation in the reservoir, limits its potential construction cost
overrun to 20 per cent, and did not consider the possibility of construction
delays.

The recent economic crisis in Thailand is expected to cut drastically
previous projections of Thai energy demand growth. As a result, Nam Theun 2
could be left without a buyer for its power.

Aviva Imhof, spokeperson for leading non-governmental group, the
International Rivers Network, says: "This project is too risky for a poor
indebted country like Laos. The recent collapse of the financing package for
the Bakun dam in Malaysia shows that even in a relatively powerful economy,
large hydropower projects are simply not attractive to investors."

Professor Guy Lanza, of the University of Massachusetts, has also concluded
that the dam would "produce major irreversible ecological, cultural and
economic damage."

The World Bank is due to decide in the next few weeks whether to move
forward with preparing loan, equity and risk guarantee backing for the
project.

***********************************************
Roberta Brook Cowan
IFI Programme Coordinator
International Financial Institutions Programme
 
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