Laos holds "groundbreaking" ceremony for contentious Mekong dam

XAYABURI, Laos Wed Nov 7, 2012 4:25am EST

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XAYABURI, Laos (Reuters) - Laos held a "groundbreaking" ceremony on Wednesday for a $3.5 billion hydropower dam on the Mekong River that is opposed by environmentalists and neighboring countries because of the possible impact on livelihoods, fisheries and agriculture.

"We had the opportunity to listen to the views and opinions of different countries along the river. We have come to an agreement and chose today to be the first day to begin the project," Deputy Prime Minister Somsavat Lengsavad said at the site.

The poor Southeast Asian country has ambitions to become the "Battery of Southeast Asia" through power exports from dams across the 4,900 km (3,044 mile) Mekong.

However, after pressure from its neighbors, it agreed to suspend the project last December, pending a study to be led by Japan. It is unclear if that study was done.

Government officials from Cambodia and Vietnam, which have opposed the dam, did not respond to requests for comment

The "groundbreaking" ceremony, which normally celebrates the formal start of construction, went ahead the morning after 29 European and Asian states, among them critics of the dam, held a summit meeting in Laos's capital, Vientiane.

Thai construction giant Ch Karnchang Pcl has been carrying out what it called preliminary work for nearly two years, with Lao officials repeatedly playing down the extent of the work. The dam had been scheduled to be built by 2019.

A Reuters journalist at the site on Wednesday said substantial construction had taken place, including access roads and work on the riverbanks, but nothing appeared to have been built on the river itself.

Prime Minister Thongsing Thammavong was quoted by the Wall Street Journal on Wednesday as saying the plans were still under study and that the day's event was simply an organized visit for journalists, scientists and others.

However, a banner at the site described it as a "groundbreaking" ceremony.

Ecologists and river experts say environmental impact assessments by Laos were inadequate and meant to appease international critics, including the United States.

They warn that the livelihoods of 60 million people in the lower Mekong region, mainly in Cambodia and Vietnam, would be at risk if the dam went ahead, arguing the current design could block the migratory routes of fish and deprive swathes of rice land of fertile silt.

MEKONG THREATENED

"Laos is playing roulette with the Mekong river, offering unproven solutions and opening up the Mekong as a testing ground for new technologies," said Pianporn Deetes, Thailand Campaign Coordinator for International Rivers, an environmental activist group. "Unless the Mekong crisis is tackled immediately, the future of the region is in great danger."

Mekong basin countries -- Thailand, Vietnam and Cambodia as well as Laos -- are bound by a treaty to hold inter-governmental consultations before building dams.

But none has veto powers and Laos is within its rights to proceed with Xayaburi, the first of 11 hydropower dams planned in the lower Mekong that are expected to generate eight percent of Southeast Asia's power by 2025.

Thailand, another country affected by the dam, has refrained from criticizing Laos. It will buy about 95 percent of the power generated by the facility.

Ch Karnchang, Thailand's second-biggest building contractor, has a 57 percent share in the project, while state-owned Thai energy giant PTT Pcl has 25 percent and state-run Electricity Generating Authority of Thailand has 12.5 percent.

Shares in Ch Karnchang rose 5.7 percent on Monday to 9.3 baht, their highest since January 2011, and climbed another 2.7 percent on Tuesday at one point before ending down 0.5 percent.

Ch Karnchang CEO Plew Trivisvavet defended the project.

"If this (would) badly affect the environment, we wouldn't do it. This company wouldn't do it. This is the company's strongest policy," he told Reuters at the site.

(Writing by Martin Petty in Vientiane; Editing by Alan Raybould and Ron Popeski)

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