From: Associated Press
Published November 29, 2004 12:00 AM

Lao Premier Urges ASEAN to Invest in Dam Project

VIENTIANE, Laos - Laos' prime minister on Monday urged Southeast Asian countries to invest in his country's hydroelectric industry, as it struggles to start work on a massive dam aimed at easing poverty but slammed by critics as an ecological disaster.


Prime Minister Bounnhang Vorachith told leaders in an opening speech to the Association of Southeast Asian Nations summit that host Laos is a landlocked country with few resources but with abundant water that it wants to harness with hydroelectric dams.


"We are aiming to turn the country into a battery for the region," he said. "Hence, I would like to propose ASEAN countries to invest in hydroelectric power projects," he said.


He said his government also aims to turn Laos "from a landlocked country to a land-linked one" by being part of the proposed Singapore-to-China railway. "I hope that the ASEAN leaders would support this proposal."


The Laotian government bills the US$1.3 billion (euro1.1 billion) plans to build the Nam Theun 2 hydroelectric dam as the centerpiece of efforts to raise living standards of the country's 5.7 million people, among the world's poorest.


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The project has been held up for years amid criticism from international environmental groups and social groups who say it will destroy the forest homes of rural Laotians and elephants.


They say the reservoir, created by the 48-meter-high (158-foot-high ) dam across the Nam Theun River, would flood a 450-square-kilometer (175-square-mile) forest area. The area is home to about 4,500 indigenous people and 60 species of birds and mammals.


"Laos is building the dam for electricity. We hope the developing and richer ASEAN members will support and assist Laos in this project, which would lead to a big step of development of our nation," Bounnhang said.


Thailand signed a contract earlier this year to buy 90 percent of the electricity produced by the dam for 25 years, providing US$200 million (euro 165 million) in annual revenues -- about half of which would go to Laos' communist government.


Environmental groups also say the revenue will enrich communist party bosses and never reach the poor.


The World Bank must decide by May 2005 whether it will provide a guarantee protecting international investors -- who'd provide 70 percent of the funding -- against the risk of investing in a communist country notorious for corruption and a weak legal system.


If approved, the dam will be built by Nam Theun 2 Power Co. Ltd., a consortium led by Electricite de France, which has a 35 percent stake.


The other partners are Laos Electricity (25 percent), Electricity Generating Authority of Thailand (25 percent) and Italian-Thai Development Public Co. Ltd. (15 percent).


Source: Associated Press


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