November 7, 2012 / 6:51 AM / 7 years ago

Laos holds "groundbreaking" ceremony for contentious Mekong dam

* Laos proceeds in defiance of international criticism

* Activists furious, say fishing and farms threatened

* Laos sees hydropower boom lifting economy

By Annie Chenaphun

XAYABURI, Laos, Nov 7 (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 some neighbouring countries because of the possible impact on livelihoods, fisheries and agriculture.

But it was unclear when actual construction of the contentious Xayaburi dam would start, with preliminary work on access roads and the riverbank already under way, and Laos’ prime minister saying plans were still being considered.

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.

The “groundbreaking” ceremony, which normally celebrates the formal start of construction, went ahead the morning after 29 European and Asian states, some of which have criticised the dam, held a summit meeting in Laos’ capital, Vientiane.

Thai construction giant Ch Karnchang Pcl has been carrying out what it says is preliminary work on the dam for nearly two years, with Lao officials repeatedly playing down the extent of the work.

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.

In an interview with Reuters on Oct. 22, Laos’ minister of energy and mines, Soulivong Daravong, said a decision on whether to start building the dam would be made within a year. It had been scheduled to be built by 2019.

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 organised visit for journalists, scientists and others.

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

Laos had agreed to suspend the project last December, pending a study to be led by Japan. It is unclear if that study was done.

Ecologists and river experts say environmental impact assessments by Laos were inadequate and were 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.

Cambodia and Vietnam have opposed the project but Thailand has refrained from criticising Laos. It will buy about 95 percent of the power generated by the dam and three Thai firms have a stake in the project.

Government officials from Cambodia and Vietnam did not respond to requests for comment.

Ch Karnchang, Thailand’s second-biggest building contractor, has a 57 percent share in the project, while state-owned 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. (Writing by Martin Petty in Vientiane; Editing by Alan Raybould and Michael Perry)

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