DEVELOPMENT-LAOS: Asian Slowdown Dams Hydropower Ambitions BANGKOK, Aug 20 (IPS) - Champagne toasts and chanting by Buddhist monks accompanied the opening in April of the Nam Theun Hinboun dam, the first major hydroelectric project in Laos in 20 years. The Lao government is counting on the 210-megawatt project, located on the Theun River in central Laos, to earn it foreign exchange mostly by selling electricity to neighbouring Thailand. But the collapse of the Thai economy has cast severe doubts on the viability of this plan and other big hydropower projects. This leaves Laos, one of Asia's poorest nations, facing a mountain of debt, cancelled power purchase contracts and serious social and environmental damage. "The economic crisis just accentuates what many people have been saying for some time now: that hydropower is simply too risky for a poor country like Laos," Aviva Imhof, Mekong programme coordinator of the U.S.-based International Rivers Network, said in an interview. Analysts predict Thailand's economy will contract by 8 percent in 1998 and further in 1999, and others see a decade-long recession following. Already, Thailand has sharply cut back on plans for expanding power capacity. Late last year, the Electricity Generating Authority of Thailand (EGAT) approved a new 15- year development plan based on a reduction in power demand of 10 to 12 percent. The state utility scaled back purchases from domestic power producers, postponed the commissioning of several power projects, and delayed purchases from some Laos projects to at least 2006. The Thai power firm's actions reveal the risks inherent in Laos' dependence on hydropower and Thailand as its only customer. As early as 1995, Lao officials conceded the price at which Thailand would buy the electricity produced at Theun Hinboun was too low. The situation has been worsened by the devaluation of the Thai baht, which has lost nearly half its value since being floated in July 1997. This has further reduced the expected returns from Laos' dam projects, since power purchase payments by Thailand provide for payment made half in U.S. dollars and half in baht. For the Nam Theun Hinboun, this has cut expected annual revenue from 25 to some 19 million dollars. Nam Theun Hinboun's major financier, the AsDB, had hailed the project "a winner" that was "set to pay its investors big time". In May, the Lao government and private hydropower developers said the financing of future schemes had become difficult or even "unbankable" due to the impact of the baht devaluation. Doubts over EGAT's long-term reliability as a power purchaser and the shaky creditworthiness of many Thai partners involved in Lao power projects, have made commercial lenders even more reluctant to provide financing. The result is that by the year 2000, despite the substantial human and financial resources poured into the hydropower sector in Laos, Vientiane could be selling but a fraction of the power it originally envisaged -- for a fraction of the returns. Instead of the 350 million dollars Laos was projected to earn annually, it would likely earn no more than 40 million a year by 2000, the IRN estimates. "With such a high reliance on a notoriously risky sector such as hydropower, the economy could be in for further shocks in the coming years," Imhof said. "It is increasingly unlikely that any consortium will be able to attract necessary financing in a country considered to be of high political and economic risk." Laos has its own economic woes. Its currency, the kip, has been falling along with approvals of foreign investment. As of the first quarter of 1998, Thailand's investment in Laos of 57 million dollars made up 90 percent of foreign investment there. And while Laos' hydropower plans slow, IRN calculates the debt service of Electricite du Laos, the state-owned utility, will rise fivefold by 2000 to 64 million dollars, from 12.5 million dollars in 1996. The Nam Theun Hinboun dam is 60 percent owned by Electricite du Laos, 20 percent by the Thai company GMS Power, and the remaining 20 percent by a consortium of Nordic interests. The development of Laos' hydropower potential has been at the centre of its development strategy since market reforms began in the late eighties, following advice from the World Bank, the Asian Development Bank (AsDB), UN agencies and private sector. Sixty percent of all water in the Mekong River originates from tributaries in Laos, giving it a hydroelectric capacity of more than 18,000 megawatts. Its small population of 4.6 million people and dramatic mix of high and low land topography appear to make the country ideal for dam building. Multilateral banks and donors then started touting Laos as the future 'Kuwait of South-east Asia'. A hydropower boom ensued, and many agreements to build power projects struck between foreign investors from North America, Europe and Asia and the Lao government. Up to 10 dams are now in varying stages of negotiation or construction. Theun Hinboun is the first to be completed. The 150- megawatt Houay Ho project, a joint venture between South Korea's Daewoo and a Thai/Lao consortium, is to be completed in early 1999 in the southern province of Champassak. The rest remain stalled due to the lack of power purchase agreements with EGAT, the only realistic buyer so far for Lao electricity, and problems seeking commercial financing. The Nam Theun Hinboun project has also come under from residents who have complained of ill effects from drops in fish catch to loss of drinking water sources. On Jul 21, more than 40 NGOs from 12 countries wrote to AsDB President Mitsuo Sato to protest the Bank's handling of the project. "The AsDB appears to be more concerned with protecting the interests of private investors than those of affected Lao citizens," they said. Still, Laos continues to support hydropower as the economy's key pillar. As the industry and handicrafts minister Soulivong Daravong said at Theun Hinboun's opening in April: "The development plans for the next coming years place the energy sector at the highest level." BKK Post / 21 August 1998 WAT THAM KRABOK Census of Hmong under way Community could be shifted to Si Khiu Onnucha Hutasingh A census of the Hmong population at Wat Tham Krabok was launched yesterday ahead of moves to relocate the community. According to the most recent survey, carried out in 1996, there were 13,000 Hmong at the wat in Saraburi but the number is now thought to be nearer 20,000. The new survey, to facilitate registration, was being carried out by the Local Administration Department and followed allegations Hmong at various locations were involved in narcotics trafficking. Opas Kaewkham, a department official, said a similar registration process would be conducted in Tak on Sept 5-29 to establish which Hmong were born here. Hmong from Wat Tham Krabok who were born in Thailand and whose parents were legal immigrants would be asked to return to villages of origin where they could apply for citizenship, Mr Opas said. Phra Chamroon Panchan, the abbot, said he was glad to see the Hmong relocated on the condition they were provided with land and utilities. The monk said the wat remained open to drug addicts but since the controversy surrounding the Hmong erupted, only 10 people were under treatment. Phra Chamroon estimated the wat housed 21,000 in 1,840 families, none of them from Laos. Among the Hmong is Heo sae Wang, who lost a leg while a defence volunteer fighting Lao forces in the Ban Rom Klao conflict in 1988. Mr Heo, 33, said he came with his parents to the wat six years ago to seek drug treatment. He said he wanted citizenship, a war veteran identification card and a plot of land on which to make a living in his native Nan. Thai sae Yang, 33, who lost his right arm and right leg in the same conflict in Chat Trakan district, Phitsanulok, said he would be happy to be granted citizenship. Suayer sae Wang, leader of Village Group 1 at Wat Tham Krabok, said about 15-20 percent of Hmong had returned to the North. The remainder wanted to leave but were concerned they would not be provided with land. Pramuan Rujanaseree, the department director, said the Hmong could be moved to the former Vietnamese refugee camp in Si Khiu district, Nakhon Ratchasima. Mr Pramuan said the Interior Ministry and National Security Council were considering a new location where the Hmong could be controlled by authorities. The survey at Wat Tham Krabok would take about 10 days and the findings would be passed on to the interior minister and the NSC.