Cambodian villagers protest controversial Laos dam

PHNOM PENH (Reuters) - Cambodian villagers demonstrated on Friday against a controversial Lao hydropower dam that activists say is being built in defiance of an agreement to assess its potentially damaging impact on millions of people first.

About 200 villagers whose livelihoods depend on the Mekong River urged a halt to the Thai-led construction of the $3.5 billion Xayaburi dam, which has angered Cambodia's government and triggered a rare rebuke by Laos's biggest ally, Vietnam.

"This dam won't just affect the people in our country but will also affect many parts of Laos," said Buddhist monk So Pra, organizer of the protest in Kompong Cham province, 124 km (77 miles) from the Cambodian capital, Phnom Penh.

The Xayaburi dam is one of dozens planned as part of Laos's aggressive push to boost its tiny $7.5 billion economy and become the "battery of Southeast Asia" by exporting the vast majority of its power.

Foreign governments are concerned Laos is prioritizing its growth ambitions over ecological and environmental protection.

Under pressure from neighbors that felt its environmental impact study was inadequate, Laos agreed in December to suspend the project pending an assessment by foreign experts. Four countries share the lower stretches of the 4,900 km (3,044 mile) Mekong -- Laos, Thailand, Vietnam and Cambodia.

Environmental group International Rivers released a report this week saying it had witnessed Ch Karnchang Pcl, Thailand's second-biggest construction firm, resettling villagers, beefing up labor, building a large retaining wall and undertaking dredging to deepen and widen the riverbed.

"So far, Ch Karnchang claims that they are only going forward with 'preliminary construction' on the project," said Kirk Herbertson, Mekong Campaigner for International Rivers.

"Ripping up the riverbed and resettling entire villages cannot be considered a preliminary activity."

Te Navuth, secretary general of the Cambodia National Mekong River Commission, said Laos had violated a 1995 agreement requiring prior consultation before starting any development on the Mekong.

"Laos always said that it's just preparatory work," he said, adding Cambodia and Vietnam would jointly demand a halt.

Thailand could also be affected but, although small protests have taken place there, the government has been reluctant to oppose the project.

Ch Karnchang has a 57 percent share in the Xayaburi, which Thai banks are helping to finance. State-run Electricity Generating Authority of Thailand (EGAT) will buy electricity generated by the plant.

(Editing by Martin Petty)