Hydropower development in the Lao PDR

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The Contested Landscapes of the Nam Theun, Lao PDR
Australian Mekong Resource Centre

The Lao PDR government looks to hydropower development as the primary source of income for the country in the future. This is seen as an important export opportunity for a country that is very poor in GDP per capita terms and quality of life indicators such as infant mortality rates and life expectancy. Importantly, the foreign debt stands at US$2 billion, a high figure in view of the small population of 4.5 million people and GDP of about US$1.3 billion.

In relation to natural resource management, the government appears cautious about negative impacts of large scale developments, mainly hydropower projects. On the other hand, the program for hydropower development is ambitious, and approved projects will have widespread and negative impacts

Photo: Gerard Cheong

The Theun Hinboun hydropower project
which began operation in April 1998.

List of planned hydropower projects

while achieving some economic gains. With the help of the Mekong River Commission, the Lao government has identified up to 60 possible large-scale hydropower projects to date.
Photo: Philip Hirsch Laos' first hydropower dam, the Nam Ngum Dam, was completed in 1971, but has proved to be economically marginal	Hydropower generating capacity is expected by the government to reach more than 3000 MW by the year 2006 and Lao PDR is actively seeking private investments to reach this target. The Lao PDR electricity authority Electricity du Lao (EdL) has a non-binding Memorandum of Understanding with its Thai counterpart Electricity Generating Authority of Thailand (EGAT) to supply 3000 MW by the year 2006. To date, more than 20 Memoranda of Understanding have been signed between the Lao PDR government and potential developers of hydropower projects in the Lao PDR. While aware that large scale hydropower developments will impact severely on the country's environments and rural populations, with potentially large losses to its significant wealth in biodiversity, the consensus view within the Lao
PDR government is that the country needs to make the sacrifices in order to develop a crucial export industry. As the government follows the export led growth model of economic development espoused by its multilateral development bank advisers such as the World Bank and the Asian Development Bank, the dilemma facing the government is that it sees no other industry, resource based or otherwise, in the short to medium term apart from hydropower that will generate what it believes to be potentially large export revenues. Whether or not such revenues eventuate and benefit the people of Lao PDR remains to be seen, given that it is reliant on a single market and the finances of foreign private investors which has already proven susceptible to economic crisis, and the fact that it will have to provide guarantees for the investors (in the form of counter-guarantees to the multilateral development banks) on a number of hydropower developments.