World Bank Attacked on Laos Dam  

By Denis D. Gray, Associated Press Writer
   BANGKOK, Thailand (AP) -- The World Bank is going ahead 
with loans and guarantees for a $1.4 billion hydroelectric 
dam in Laos, which critics say will be environmentally 
destructive and financially risky.
   The Nam Theun 2 dam, planned for a tributary of the 
Mekong River, has emerged as one of Asia's major 
environmental battles, pitting developers from half a dozen 
nations against conservationists.
   The developers appeared to have won another round with a 
World Bank decision last Thursday to proceed with some 
loans and guarantees to investors against actions that 
might be taken by the Laos government.
   An official at the World Bank office in Bangkok said the 
precise terms of the guarantees have not been set and added 
that the bank imposed several conditions for developers.
   Those include complying with the bank's program to 
minimize environmental and social damage in the remote, 
once pristine region of southern Laos, the official said on 
condition of anonymity.
   But in Washington, another World Bank official insisted 
that the board of the 180-nation international lending 
organization had not made a final decision on whether to 
proceed with the project.
   "The operations committee has decided to continue with 
the appraisal," the official said, also speaking on 
condition of anonymity. "The project is still in 
feasibility stage."
   Word of the decision drew immediate fire from anti-dam 
activists.
   "This is a foolish and irresponsible decision by the 
bank. The government of Laos could end up further indebted, 
while its rivers, forests and the livelihoods of thousands 
of people would have been compromised," said AID/WATCH, a 
private Australian organization.
   The San Francisco-based International Rivers Network 
said it was "foolish for the bank to push ahead with this 
highly risky project" just as Thailand and other Southeast 
Asian nations face economic crises.
   Thailand is to be the sole buyer of electricity from the 
681-megawatt dam, but how much it will eventually purchase 
remains uncertain. Thai forecasts for electricity 
consumption are being lowered, as are some projections for 
how much Laos will earn from Nam Theun.
   One of the world's poorest nations, Laos hopes to use 
its substantial hydroelectric potential to boost its 
economy. Dozens of dam projects are on the drawing boards.
   Environmental groups say the Nam Theun dam will flood 
forests where rare species still survive and uproot 4,500 
people from their traditional way of life. The dam's 
reservoir will cover 174 square miles of the Sakai Plateau, 
an area of great, but increasingly degraded, biodiversity.
   The World Bank, stung by past criticism for backing 
destructive dams, has moved with caution on the Nam Theun 
project, demanding numerous studies and Laotian involvement 
in the decision making.
   Needing the World Bank's blessing is a multinational 
consortium headed by Transfield, an Australian engineering 
company that was granted the lead role by Laos in 1993.
   Others in the consortium are Electricite de France, 
three Thai companies and the government of Laos, which 
would hold an equity stake of about 25 percent in the 
project.
   The bank's caution, which has greatly slowed progress on 
the dam, has not satisfied environmental groups. They claim 
some of the environmental and social impact studies are 
flawed, and that meaningful public decision-making is a 
farce in Laos, a Communist Party-ruled state.
   "The bank should surely understand by now that promoting 
mega-projects in poor and indebted countries is a recipe 
for economic and environmental disaster," said the 
International Rivers Network.
   The final financing package will not be submitted for 
approval by the bank's board until mid-1998.