On March 31, 2005—coincidentally, the day of the controversial appointment of Paul Wolfowitz as president of the World Bank—the Bank’s Board of Executive Directors approved a $50 million loan for the Nam Theun 2 Hydroelectric Project (NT2), a project with noble ambitions but, critics say, flawed reasoning that will lead to devastating consequences.
By building a dam to supply electricity to neighboring Thailand, the $1.3 billion project aims to generate revenue for education and basic health spending in Laos, the poorest country in Eastern Asia. The World Bank heralds the project as a sound first step toward poverty reduction in Laos—but many social and environmental organizations have raised serious doubts about the Bank’s rationale for supporting the dam.
The International Rivers Network (www.irn.org) states that “there are no guarantees that the revenue from NT2 will be used for poverty alleviation, nor that the project’s significant impacts on local communities and on the environment can be successfully managed” (www.irn.org). The dam will displace more than 6,000 indigenous Laotians and affect more than 100,000 other villagers who depend on the river for their livelihood. The Laos government is notoriously corrupt, and accountability for responsible use of revenue from the project will be difficult to monitor.
The Bank itself admits that “the NT2 project entails a significant number of risks and triggers all ten of the World Bank’s safeguard policies” (emphasis added; Project Information Document: (web.worldbank.org). Additionally, the IRN cites past failures by the World Bank to follow through on similar projects in Thailand, failures that inspired hundreds of farmers and activists to burn an effigy of current Bank President James Wolfensohn in a demonstration protesting NT2 in mid-March (http://www.rfa.org/english/lao/2005/03/14/thailand_laos_dam/).
But perhaps the most telling analysis comes from the Bretton Woods Project (www.brettonwoodsproject.org), a watchdog organization whose mission involves working for “increased transparency and civil society participation in WB and IMF policies and interventions” (www.brettonwoodsproject.org):
“In an in-depth presentation to European executive directors in Brussels in March, Witoon Permpongsacharoen, of Thai NGO TERRA, questioned the Bank’s economic assumptions and provided evidence that the Bank had:
- manipulated Thailand’s power development plan to reveal a shortfall equivalent to the electricity that NT2 would generate;
- exaggerated the growth of future electricity demand in Thailand;
- suppressed analysis of cheaper energy conservation and renewable energy; and
- ignored alternative options which are cheaper and cleaner than NT2.
“Since then, final versions of the Bank’s two main economic analyses of the hydropower project, released just before project approval, contained dramatic new assumptions regarding assumed costs of natural gas alternatives. This was raised in a letter by Thai economic and energy analysts sent to Bank executive directors on 29 March who questioned the dramatic diversion from the analysis in earlier versions of the studies. The unexplained changes appear to have been made at the last minute to provide a stronger case to support the project.” (full article at: www.brettonwoodsproject.org)
The involvement of economic hit men clearly cannot be proven, but the point is clear: NT2 is not all it seems.
Special EHM Alert Update
After we sent the above EHM Alert about the World Bank’s involvement in the Nam Theun 2 Hydroelectric Project (“Cooking the Books in Laos?”), we were contacted by Chris Greacen of Palang Thai, the independent public interest energy analysis organization whose research we had cited in our newsletter. Chris provided us with further documentation regarding the World Bank’s “fudged figures," including an op/ed piece about the project as well as a letter from Palang Thai to the World Bank.
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