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Powering the Mekong: A Case Study on the Don Sahong Dam May 11, 2015 Peter Chang Yup Kim Doo Wan Nam Semi Yoon Johns Hopkins University Paul H. Nitze School of Advanced International Studies

Spring 15

08 Fall

Key Acronyms

BOT: Build-Operate-Transfer

kWh: Kilowatt-hour

LDC: Least Developed Country

MOU: Memorandum of Understanding

MRC: Mekong River Commission

MW: Megawatt

NSEDP VII: Seventh National Socio-Economic Development Plan

The authors have prepared this case study under the supervision of Professor Celeste Connors for

SA.680.784.01 Case Studies in Sustainable Development: Policy and Practice. The information

presented here is not intended to propose solutions or make recommendations. Instead it provides

a framework for examining global issues through the lens of sustainable development.

“Don Sahong dam is a dangerous experiment and Mega First is gambling with the

livelihood of millions.”1

Chhith Sam Ath, World Wildlife Fund (WWF)

On September 11, 2014, community mobilizers, youth, Buddhist monks, and various

organizations gathered in Cambodia to rally against the construction of the Don Sahong dam in

southern Laos by a Malaysian property company called Mega First Corporation Berhad. A few

months later on October 20, a group of six regional and international NGOs filed a complaint

with the Human Rights Commission of Malaysia, asking it to ensure that Mega First complies

with international human rights standards–especially “the responsibility to respect the rights to

life and livelihood and the obligation to meaningfully engage with and inform affected

communities.”2 Foreign media outlets in the region have also criticized the project, raising

concerns about environmental protection and transboundary impact.

However, the government of Laos has a different opinion. In spite of the protests and opposition

from different actors, Mr. Viraphong Viravong, the Vice Minister of Energy and Mines, is highly

optimistic. Expressing confidence in the project, Vice Minister Viravong announced, “The

people of the area will have a new way of living.”3

A GROWING LAOS

The Lao People’s Democratic Republic is a landlocked country in Southeast Asia with a

population of close to 7 million and is surrounded by China, Myanmar, Thailand, Cambodia, and

Vietnam. Categorized by the United Nations as a least developed country (LDC), Laos is

primarily an agricultural economy. Nevertheless, economic growth is rapidly catching up. From

2005 to 2013, its annual GDP growth averaged at 8.2 percent, with its real GDP in 2013 around

3.1 times higher than that of 2005. Per capita GDP has witnessed a jump as well, from US$ 472 1 "Say No to Don Sahong Dam," World Wildlife Fund, September 12, 2014, http://www.worldwildlife.org/stories/say-no-to-don-sahong-dam (accessed May 4, 2015). 2 Tanja Venisnik and Ame Trandem, "No Fish, No Food: NGO Coalition Files Complaint Against Don Sahong Dam Developer," World Wildlife Fund, October 20, 2014, http://www.earthrights.org/media/no-fish-no-food-ngo-coalition-files-complaint-against-don-sahong-dam-developer (accessed May 4, 2015). 3 Joshua Lipes, "Laos to Break Ground on Don Sahong Dam in December," Radio Free Asia, March 12, 2014. http://www.rfa.org/english/news/laos/dam-03122014170938.html (accessed May 1, 2015).

in 2005 to US$ 1,661 as of 2013.4

Yet Laos’ per capita GDP is still less than half of its major neighbors, namely China and

Thailand, and development cannot come quickly enough. In its Seventh National Socio-

Economic Development Plan (NSEDP VII), published in 2011 by the Ministry of Planning and

Investment, Laos listed out four broad goals to move the country forward:

• Ensure continuation of national economic growth with security, peace, and stability, and

ensure GDP growth rate of at least 8 percent annually and for GDP per capita to be at

least US$ 1,700.

• Achieve the Millennium Development Goals by 2015, adopt appropriate technology and

skills, and create favorable conditions for graduating the country from LDC status by

2020.

• Ensure sustainability of development by emphasizing economic development with

cultural and social progress, preservation of natural resources, and protection of the

environment.

• Ensure political stability, peace, and an orderly society.5

As seen above, an essential element of NSEDP VII is environmental protection and natural

resources management, and this is a reflection of and self-acknowledgment by Laos of its

precarious situation in energy development. Because Laos lacks conventional fossil fuels such as

oil or natural gas, water sources, especially the Mekong River, have been critical when it comes

to energy development. Laos has focused mainly on hydropower development–gifted by its

extremely hilly and mountainous terrain–and is succeeding. Electricity generation in Laos was

3.7 billion kWh in 2009 but has soared to 12 billion kWh by 2013, increasing by almost

threefold over a period of five years.6 During this same period, hydropower has been responsible

4 World DataBank, “World Development Indicators,” World Bank, http://databank.worldbank.org/data/views/variableSelection/selectvariables.aspx?source=world-development-indicators (accessed April 30, 2015). 5 Bounthavy Sisouphanthong, “7th National Socio-Economic Development plan (2011-2015)” (presentation by the Vice Minister of Planning and Investment of Lao PDR for the General Assembly of the United Nations, New York, NY, March 11, 2011). Note that NSEDP VII sets out development goals for the years 2011 to 2015. 6 Laos, “International Energy Statistics,” U.S. Energy Information Administration (EIA), http://www.eia.gov/beta/international/data/browser/ (accessed May 3, 2015).

Run-of-the-river hydroelectricity is a type of hydroelectric power generation in which little or

no water storage is provided. A run-of-the-river hydropower station may have no storage at all

or a limited amount of storage, in which case the storage reservoir is known as pondage.

Because of this characteristic, hydropower generation involving a run-of-the-river dam,

especially one without pondage, depends significantly on seasonal river flows.

Run-of the-river hydroelectricity is considered ideal for rivers or streams with minimum dry

weather flow. Most run-of-river projects neither require a large amount of water nor flood

large tracts of land.

for an average of 90 percent of Laos’ total electricity generation.7

DON SAHONG DAM: DEVELOPMENTS UNTIL NOW

The next step in Laos’ continued push for hydropower expansion is Don Sahong. The Don

Sahong dam is a proposed run-of-the-river hydroelectric dam on the lower Mekong River just

two kilometers upstream of the Laos-Cambodia border. Known as the Siphandone Wetlands,

named after the four thousand islands formed on the river, this area is where the Mekong splits

into multiple branches and plunges over a 20-meter fault line, creating a labyrinth of steep,

narrow gorges and waterfalls–including the Khone Phapheng Falls, one of the most popular

tourist attractions in Southeast Asia.

Box 1: Run-of-the-River Hydroelectricity

The Don Sahong dam will sit right at the downstream end of the Hou Sahong channel, which

also happens to be the main migratory route for millions of fish in the region. The Hou Sahong

comprises of a series of rapids rather than waterfalls unlike neighboring channels and is much

more gradual in its descent. During the dry season, the Hou Sahong channel is the only passage

available for migrating fish.8

7 “International Energy Statistics.” 8 Philip Hirsch, "Laos Mutes Opposition to Controversial Mekong Dam," Chinadialogue, November 18, 2013, https://www.chinadialogue.net/article/show/single/en/6509-Laos-mutes-opposition-to-controversial-Mekong-dam (accessed May 5, 2015).

The Lao government has been working with Mega First on the Don Sahong dam ever since

March 2006 when Mega First signed a MOU with Laos to prepare feasibility studies for the dam.

This evolved into the Project Development Agreement, signed in February 2008, which

authorized Mega First to enter into advanced negotiations and finalize project details by

September 2009 with the Lao government and potential electricity buyers.9 Around the same

time in early 2008, Mega First appointed AECOM, an American provider of professional

technical services, as its Owner’s Engineer to complete engineering feasibility studies.10 Mega

First also has two small investments–a coal plant in Shaoxing, China, and a diesel-fueled power

plant in Tawau, Malaysian Borneo–but has no relevant experience working in Laos or with

hydroelectricity.11

On September 30, 2013, Laos notified the Mekong River Commission (MRC), a regional

advisory body founded in 1995 by Cambodia, Laos, Thailand, and Vietnam, of its plans to build

the Don Sahong dam. As per the 1995 Mekong Agreement, the host country must notify the

MRC of any proposed dam project on the mainstream Mekong. If the MRC is unable to reach a

consensus on how the project should proceed, then the project goes through a prior consultation

process. This consultation happened in July 2014, when Laos, after battling furious opposition

from multiple parties, decided to halt and open the Don Sahong project to a six-month

consultation process with the MRC. However, construction on secondary infrastructure such as

roads and bridges continued.12

Facing challenges with dam projects is not new for Laos. Prior to Don Sahong, Laos gave the

green light to the Xayaburi dam despite similar complaints. Partnered with Ch. Karnchang Public

9 "The Don Sahong Hydropower Project," International Rivers, February 7, 2014, http://www.internationalrivers.org/files/attached-files/don_sahong_briefing_sheet_2.7.14.pdf (accessed May 12, 2015). 10 Aecom Technology Corporation, "Don Sahong Hydropower Scheme, Lao PDR." http://www.aecom.com/Where+We+Are/Asia/Energy/_carousel/Don+Sahong+Hydropower+Scheme,+Lao+PDR (accessed May 12, 2015). 11 Mega First Corporation Berhad, "Our Business." http://www.mega-first.com/business.html (accessed May 4, 2015). 12 Manichanh Phimphachanh, "Laos to Break Ground on Don Sahong Dam in Early 2015," Radio Free Asia, December 24, 2014, http://www.rfa.org/english/news/laos/dam-12242014141437.html (accessed May 4, 2015).

Company, a Thai construction firm, Laos started full construction on Xayaburi in November

2012 but not before running into a host of problems and controversies. Like with Don Sahong, a

concerned MRC approached Laos about the dam and its potential negative impact on the

environment, especially on the downstream riparian regions of Cambodia and Vietnam.

Notification occurred in September 2010 with a prior consultation process slated to occur in late

2011. Laos agreed with the other MRC parties in April 2011 to defer the project until then.13

However, the government of Laos simultaneously also authorized Ch. Karnchang to continue

work on the Xayaburi dam. Only after Cambodia threatened to take Laos to international court

did Laos halt construction in May 2012.14 Construction resumed several months later in

November 2012 with some modifications to the dam’s design in order to moderate

environmental damage.

With an installed capacity of 1,285 MW, the Xayaburi is estimated to boost energy generation

significantly. The Don Sahong dam, in comparison, is designed to generate a mere 260 MW,

making it the smallest dam on the Mekong mainstream.

A MAN WITH PASSION AND VISION

These issues converge in one person: Mr. Viraphonh Viravong, the Vice Minister of Energy and

Mines. As the deputy minister of energy, Vice Minister Viravong has considerable influence and

authority over Laos’ hydropower policy. A mechanical engineer with managerial experience in

hydropower utilities such as at the Theun Hinboun Power Company, Viravong believes that

hydropower is the key to moving Laos out of LDC status and is integral to the country’s

economic growth.

But Viravong’s affection for hydropower is more than just numbers. In countless interviews and

editorials, he has substantiated Laos’ hydropower expansion with grander justifications, arguing

that Laos has a “commitment” to develop clean and renewable power and that hydropower is “a

13 Martin Petty, "Laos Defies Neighbours on Dam Project-environmentalists," Reuters, June 23, 2011, http://uk.reuters.com/article/2011/06/23/laos-dam-idUKL3E7HN1L320110623 (accessed May 1, 2015). 14 Rachel Vandenbrink, "Cambodia Warns Laos Over Mekong Dam," Radio Free Asia, April 19, 2012, http://www.rfa.org/english/news/cambodia/dam-04192012143244.html (accessed May 4, 2015).

source of national pride for the Lao people.”15 Viravong’s passion and hope for hydropower is

not a secret, and he has announced repeatedly that Laos will become the “battery of Southeast

Asia.”16 In fact, of the 11 dams that have been proposed along the lower Mekong River, nine of

them, including Don Sahong, are in Laos.

Due to his ability to speak fluent English,17 Viravong has considerable exposure to both domestic

and foreign media and has been the main government spokesperson addressing complaints,

opposition, and concerns over the Don Sahong dam project.

A WATERFALL OF CHALLENGES

Unsurprisingly, regional and international NGOs have been the greatest voice of opposition.

With a coalition of organizations including World Wildlife Fund, International Rivers,

EarthRights International, Cambodian Rural Development Team, Community Resource Center,

and many more, NGOs opposed to the construction of the dam have been raising concerns to the

Lao government and Mega First both in person and through the media.18

Environmental Challenges

The greatest concern with the Don Sahong dam is its environmental impact. While hydropower

is often considered a form of renewable energy, the detrimental ramifications of dam

construction on the ecosystem cannot be ignored. Consequently, NGOs, local communities, and

the governments of downstream countries are alarmed by the potential environmental damage

associated with the project. For instance, in April and May 2007 respectively, 28 NGOs and 34

scientists sent official letters to the Lao government calling for a reconsideration of the

15 Viraphonh Viravong, "Laos Is Acting Responsibly on Mekong Dam Project," The Nation, October 24, 2014, http://www.nationmultimedia.com/opinion/Laos-is-acting-responsibly-on-Mekong-dam-project-30246103.html (accessed May 4, 2015). 16 Jason Folkmanis, "Laos Draws Ire of Neighbors With Mekong River Dam Plans," Bloomberg Business, June 4, 2014, http://www.bloomberg.com/news/articles/2014-06-03/laos-draws-ire-of-neighbors-with-mekong-river-dam-plans (accessed May 3, 2015). 17 Viravong studied in Australia and has a degree in Mechanical Engineering from the Footscray Institute of Technology, Victoria University. 18 "NGOs File Complaint Against Don Sahong Developer in Malaysia." The NGO Forum on Cambodia, December 25, 2014, http://www.ngoforum.org.kh/index.php/en/hot-news/events/226-ngos-file-complaint-against-don-sahong-developer-in-malaysia (accessed May 9, 2015).

Based on a study by International Rivers and the Rivers Coalition in Cambodia, the following

are the main fish migrations in the Khone Phapheng Falls region that would be blocked by the

Don Sahong dam.

December to January: A number of species of medium-sized cyprinid fishes migrate from

the Sekong, Sesan, and Srepok Rivers in Cambodia and Laos to the Mekong River via the

Hou Sahong.

January to March: Very large schools of small species of cyprinid fishes, especially the pa

soi, migrate upriver from the Tonle Sap Lake in Cambodia to Laos and the Mekong River via

the Hou Sahong. The pa soi are important to the livelihoods of people living along the

Mekong in southern and central Laos.

April: Large cyprinid fish species including the pa phone migrate up the Mekong River from

Cambodia to Laos by passing through the Hou Sahong.

April to May: Small Pangasiidae catfish called pa nyone thamada migrate upriver from

Cambodia into Laos via the Hou Sahong.

May to June: Pangasiidae catfish migrate upriver from Cambodia into Laos via the Hou

Sahong. One particular kind of catfish, called pa souay hang leuang, migrates all the way up

the Mekong River from the Mekong Delta in Vietnam.

October to January: Large carps, including pa eun ta deng and pa eun khao which are

threatened species, spawn in the Khone Falls region near the Don Sahong dam site.

construction of the dam, emphasizing the environmental costs.

The central problem is the dam’s obstruction of migratory paths for native fish species along the

Hou Sahong channel. Given that over 100 fish species migrate through the Hou Sahong channel

annually, the complete blockage of the channel due to the dam will tremendously affect the

ecosystem in the area.

Box 2: Known Fish Migrations through Hou Sahong19

19 "The Don Sahong Hydropower Project,” International Rivers.

A further concern is the impact of the dam, especially dam construction, on the Irrawaddy

dolphins that live in the Veun Nyang deep pool just downstream of the Siphandone. The

dolphins are critically endangered with fewer than 100 individuals remaining.

Mega First claims that the impact on fish can be minimized through mitigation measures

including fish ladders, bypass channels, and a lift, but their feasibility remains a question due to

vague information, lack of credible data on channel flow, no transboundary impact assessment,

and no meaningful consultation with downstream countries. Moreover, the trial-and-error nature

of Mega First’s mitigation suggestions remains at odds with environmental impact assessments

independently conducted by NGOs with the help of external consultants.

Thako Project: A foregone alternative?

With controversy surrounding the harmful environmental impact of the dam and uncertainty

behind the mitigation suggestions put forward, stakeholders are looking at alternative

hydropower projects that can achieve Laos’ energy goals without hurting the environment. One

such alternative is the Thako Project. Originally one of two dams for the Siphandone region

proposed to the Lao government along with the Don Sahong, the Thako Project would excavate a

headrace diversion channel that bypasses the Khone Phapeng Falls. A powerhouse would be

placed at the diversion channel’s downstream, producing up to 172 MW. The Thako Project was

previously considered by the French dam developer Compagnie Nationale du Rhone, which has

experience in Laos with providing an independent review of the Xayaburi dam, but the claims to

the project were transferred to Glow Energy, a Thailand-based power and utility company. While

Thako has a slightly lower installed capacity than the Don Sahong dam, it has a relatively tiny

environmental footprint, especially on fish migration, because it does not block the Hou Sahong

channel. Yet, there is not enough water for both the Don Sahong and Thako to be built and

operate as desired, and the government has not released an official statement as to why the Don

Sahong was chosen over the Thako.

The MRC plays a critical role in the decision-making process for the Don Sahong dam

because it is the primary outlet for Thailand, Cambodia, and Vietnam to voice their concerns

with the project to Laos. Formed in 1995, the MRC is an intergovernmental body that

promotes and coordinates “sustainable development, utilization, management, and

conservation of the water and related resources of the Mekong River Basin.” Because the

Mekong is a shared river, under the MRC agreement, all dams on the mainstream Mekong

should go through a consultation process with other MRC states to reach a consensus on how

they should proceed.

When the Lao government opened the project to a six-month consultation process by the

MRC in July 2014 after objections from its neighbors, it provided a technical feasibility

study, environmental and social impact assessments, and a fisheries study to the MRC, stating

that it “believes the project will not affect downstream countries Cambodia and Vietnam.”

However, Cambodia and Vietnam will disproportionately bear the socioeconomic costs from

the project according to an independent report by the Stimson Center, a Washington-based

security think tank. Accordingly, the two countries have not expressed support for the project.

It is important to note that the 1995 Mekong Agreement explicitly states the MRC “cannot

prevent member parties from building dams on the mainstream of the river.” In other words,

the other MRC countries do not have administrative authority over the likelihood of the

project, so while they act as major stakeholders, they do not have decision-making power.

This dynamic is clearly delineated by the actions of the Lao government. In a January 2015

interview with Voice of America Cambodia, Mr. Daovong Phonekeo, director-general of

Laos’ Department of Energy Policy and Planning, mentioned:

Box 3: The Mekong River Commission and Opposition from Neighboring Countries20 21 22

20 Supalak Ganjanakhundee, "WWF Calls for Emergency MRC Meeting over Laos' Decision to Build 2nd Dam," The Nation, October 6, 2013, http://www.nationmultimedia.com/national/WWF-calls-for-emergency-MRC-meeting-over-Laos-deci-30216410.html (accessed May 3, 2015). 21 Manichanh Phimphachanh, "Laos to Break Ground on Don Sahong Dam in Early 2015.” 22 Say Mony, "Lao Official Defends Don Sahong Dam," Voice of America Cambodia, January 19, 2015, http://www.voacambodia.com/content/lao-official-defends-don-dahong-dam/2604483.html (accessed May 5, 2015).

“For the development of the Mekong River, we don’t need consensus. The purpose of the prior consultation is to provide the other member countries with the information, and then we have to listen to the concerns from the other member countries, and after that we will study the concerns. If the concerns are legitimate, is the concern really there, and how we mitigate and then we cooperate together. And then, we can show what the developer can do that has no significant impact.”

Economic Challenges

Energy exports from hydropower are a major source of revenue. Even though 25 percent of

households in Laos still have no access to electricity, much of the electricity generated by

hydropower in Laos is exported to neighboring countries such as Thailand and Vietnam and, to a

lesser extent, Cambodia.23 In fact, out of the 3.2 GW generated in total by hydropower plants,

only 1 GW serves Laos while the rest is sold.24 Net government revenue from hydropower

reached US$ 93.6 million25 in 2012 and is expected to increase to US$ 350 million by 2020.26

For the Don Sahong dam, the main economic tradeoff to 260 MW of electricity generation is the

tourism industry. The tourism industry in Laos is the second largest sector of Laos’ economy

after agriculture, which constituted 26.5 percent of total GDP in 2013.27 While tourism was

valued at 4.7 percent of total GDP in 2013, the total contribution of tourism to GDP, including

increases in investment spending, employment, and purchases of goods and services, is forecast

to expand rapidly to 13.9 percent of total GDP by 2024, or approximately equal to US$ 2.9

billion.28

23 International Finance Corporation, IFC Promotes Sustainability in Lao PDR’s Hydropower Sector (Washington, DC, 2014), 2. 24 Florence Tan, “Interview-Laos’ hydropower generation capacity to jump almost four-fold by 2020,” Reuters UK, October 28, 2014, http://uk.reuters.com/article/2014/10/28/laos-energy-minister-idUKL4N0SL0EG20141028 (accessed June 30, 2015). 25 Asian Development Bank, The Lao Economy: Capitalizing on Natural Resource Exports (Manila, 2013), no. 330, 9. Revenue calculated as 1 percent of Lao GDP (current US$) in 2012, or US$ 9,359,185,244.2 (World DataBank). 26 World Bank, Lao PDR Development Report 2010: Natural Resource Management for Sustainable Development (Washington DC, 2010), 5. 27 Data, “Agriculture, value added (% of GDP),” World Bank, http://data.worldbank.org/indicator/NV.AGR.TOTL.ZS (accessed June 30, 2015). 28 World Travel and Tourism Council, Travel & Tourism Economic Impact 2014 Laos (London, 2014), 1-2. LAK 23,301.8 billion was converted to US$ on July 6, 2015, using the conversation rate LAK 8048.29 = US$ 1.

The Don Sahong area is visited only by a few foreign tourists at present, yet its potential is

incalculable: a pristine natural environment, authentic village life and culture, and fishing-related

activities. The Siphandone region as a whole was visited by over 80,000 foreign tourists in 2006,

mostly for sightseeing at the Khone Phapheng Falls and dolphin watching at the Irrawaddy

dolphin site. Dolphin-watching is an increasingly popular form of tourism in the region.

Nevertheless, the dam construction would reduce approximately 34 percent of dolphin

occurrence at the site and create a detrimental impact on Cambodia’s dolphin-watching industry,

which is currently valued at US$ 4 million.29

Aware of the country’s huge potential for ecotourism in the Siphandone region, even Laos’

tourism ministry is against the construction of the Don Sahong dam.30 Plans to propose the

Siphandone Wetlands for accession to the Ramsar Convention on Wetlands of International

Importance would be thwarted by the construction of the Don Sahong dam.31 This designation

would support efforts to protect the region and promote ecotourism, which would bring inclusive

economic growth to the local communities.

Moreover, it is still debatable and unclear where the electricity generated by the Don Sahong

dam will be used–exported or used domestically. Many people argue that it will be exported, but

there are some questions on whether the new dam can actually produce enough electricity to

export to other countries. Mr. Witoon Permpongsacharoen, the director of the Mekong Energy

and Ecology Network's Foundation for Ecological Recovery, has claimed in bewilderment that

the Don Sahong, as a run-of-the-river dam, can operate only three to four hours per day and so

“to put it straight, this dam won't be able to power three shopping malls in Bangkok.”32

29 "Don Sahong Dam Brief: Very High Risk for Cambodia," World Wildlife Fund. January 2014, http://d2ouvy59p0dg6k.cloudfront.net/downloads/don_sahong_brief___final_05feb.pdf (accessed June 30, 2015). 30 Tom Fawthrop, "Mekong River Hydroelectric Dam Threatens Livelihoods and Endangered Species in Landlocked Laos," The Guardian, March 13, 2009, http://www.theguardian.com/environment/2009/mar/13/laos-hydroelectric-dam (accessed May 3, 2015). 31 Wetlands included in the Ramsar List of Wetlands of International Importance “acquire a new national and international status: they are recognized as being of significant value not only for the country or the countries in which they are located, but for humanity as a whole.” 32 Nanchanok Wongsamuth "Fishing in Troubled Waters," Bangkok Post, November 21, 2013, http://www.bangkokpost.com/business/news/380919/fishing-in-troubled-waters (accessed May 8, 2015).

Social Challenges

Fishing is a key industry in Laos and Cambodia, and locals and NGOs believe that dam

construction will detrimentally impact fisheries, threatening not only food security and

traditional means of living but also the region’s economy. Estimation of capture fisheries in the

region is between US$ 1.4 and 3.9 billion every year, and the dam would jeopardize this value.33

In addition, the construction of the dam may cause an imbalance in the local residents’ diets

since about 80 percent of their protein consumption comes from fish captured in the area around

the Don Sahong dam.34

Catches have been dwindling in recent years, with villagers earning less than half of what they

earned 10 years ago. A combination of illegal traps and unsustainable fishing has led to a

decrease in fish population. With the dam posed to block fish migration with no proven measures

to protect fish stocks, inhabitants of villages in the region will become critically vulnerable.

Viravong believes that the construction of the Don Sahong dam will not be the demise but rather

a golden opportunity for increased wellbeing because the locals will benefit from new roads,

improved education, healthcare, electrification, and water supply. Yet, the poor in local

communities in Laos and Cambodia are heavily dependent on fish, and according to the Laos-

based National Consulting Company, the incomes of these villagers now average around US$

600 per year, or less than half of the national average income in Laos.35 Viravong’s strategy is to

persuade residents that fishing cannot offer a sustainable lifestyle, and some villagers agree. A

54-year-old villager interviewed by the Bangkok Post said, “We’ve been doing the same thing

for generations, and we want something else.”36 For him, the Don Sahong dam represents a hope

that a new construction project will bring in jobs and a better livelihood.

However, locals have received misleading and incomplete information about the likely impacts

33 "Don Sahong Dam Sustainable Solutions Exist," World Wildlife Fund, January 2014, http://awsassets.panda.org/downloads/alternative_to_don_sahong___thako_project.pdf (accessed May 4, 2015). 34 “Don Sahong Dam Threatens Mekong Fisheries,” International Rivers, December 16, 2014, http://www.internationalrivers.org/blogs/259-4 (accessed May 8, 2015). 35 Nanchanok Wongsamut, "Fishing in Troubled Waters.” 36 Ibid.

of the dam from Mega First, and people in downstream Cambodia have received even less

information about the project.37 Such cases of gaps in information include action plans for

compensating the 63 inhabitants that will be displaced from two villages due to the dam

construction.38 Although Mega First is to pay a total of US$ 385,600 as compensation and to

provide new jobs in fields such as animal husbandry and vegetable farming under a resettlement

plan suggested by National Consulting,39 there has been no follow-up discussion.40 Moreover,

upon inquiry, Mega First has refused to reveal whether they had conducted an accurate social

impact assessment on the inflow of laborers near the construction site.

These issues on an aggregate level have contributed to widespread distrust in the project among

the local communities. For example, according to a joint survey by Green Innovation and

Development Center and the Southwest Steering Committee, only about two percent of people in

the Mekong Delta region support the construction of the dam.41

ACTING RESPONSIBLY

Viravong’s response to the issues and challenges surrounding the Don Sahong dam has always

been clear: that Laos is acting responsibly on the project and on hydropower overall. In an

October 2014 editorial on The Nation, a Bangkok-based English daily newspaper, Viravong

wrote the following:

“Earlier this year, many of the same [environmental] activists lambasted the Laos government for submitting a proposal for the 260-megawatt Don Sahong Hydropower Project… Environmental activists are grousing about the MRC consultation process because they are not interested in furthering technical exchange that could identify, minimize and mitigate potential environmental

37 "Don Sahong Dam," International Rivers, http://www.internationalrivers.org/campaigns/don-sahong-dam (accessed May 5, 2015). 38 "Don Sahong Dam Sustainable Solutions Exist." 39 National Consulting Company, “Don Sahong Hydropower Project, Lao PDR: Resettlement Action Plan.” C.13 Budget, http://www.mrcmekong.org/assets/Other-Documents/Don-Sahong/DSHPP-RAP-FINAL-2013.pdf (accessed July 1, 2015). 40 Joshua Lipes, "Laos to Break Ground on Don Sahong Dam in December." 41 "Mekong Delta Residents Object to Don Sahong Dam Construction," Vietnam Net, January 26, 2015, http://english.vietnamnet.vn/fms/environment/122025/mekong-delta-residents-object-to-don-sahong-dam-construction.html (accessed May 5, 2015).

impacts. They are simply out to stop development of hydropower on the Mekong.”42

He stresses that activists are stubbornly dismissing the MRC prior consultation process as a

failure and unrelentingly want the MRC to prevent Laos from building dams on the Mekong. The

“MRC is not a building permits office,” Viravong claims, “By now, [activists] should realize that

the Lao government will not be deterred from its commitment to develop clean, renewable

hydropower, a source of national pride for the Lao people and a sustainable, reliable source of

electricity in the region.”

THE FINAL SAY

On March 3, 2015, shortly after the termination of the six-month MRC consultation, Laos and

Mega First filed a shareholders agreement to form a joint build-operate-transfer (BOT) venture

called the Don Sahong Power Company (DSPC). Mega First and Electricite du Laos, a state-

owned enterprise, now hold 80 percent and 20 percent shares of the venture, respectively. DSPC

will operate as a unit under Mega First over a 30-year concession, with rights transferred to the

Lao government at no cost upon its termination.43 Interestingly, Mega First has decided not to

share financing details or the expected revenue stream after the dam is constructed.

As of now, Mega First has signed a contract with Sinohydro International Corporation, a Chinese

state-owned hydropower engineering and construction company, with an agreement that

Sinohydro delivers engineering, procurement, and construction. Sinohydro is already

constructing preliminary infrastructure work, such as roads and a bridge that crosses over the

Hou Sahong channel for equipment delivery.44 Construction for the dam is scheduled to finish in

February 2018, with commercial operation beginning in May 2018.

42 Viraphonh Viravong, "Laos Is Acting Responsibly on Mekong Dam Project." 43 Michael Harris, “Mega First signs agreement for development of Don Sahong hydropower project in Laos,” Hydro Review, March 3, 2015, http://www.hydroworld.com/articles/2015/03/mega-first-signs-agreement-for-development-of-don-sahong-hydropower-project-in-laos.html (accessed July 1, 2015). 44 Daniel Pye and Laignee Barron, “Dam promises are a ‘façade.” Phnom Penh Post, October 3, 2014, http://www.phnompenhpost.com/national/dam-promises-are-%E2%80%98-facade%E2%80%99 (accessed May 5, 2015).

Despite all the opposition and challenges, Viravong was able to push the project forward.

According to the MOU signed by Laos and Mega First, electricity generated by the Don Sahong

dam will be used for internal use. However, other non-governmental reports indicate that

electricity generated by the plant could possibly be sold to Thailand, Vietnam, and Cambodia.45

Whether power will actually be used domestically or be exported is still up for speculation.

45 Michael Harris, “Mega First signs agreement for development of Don Sahong hydropower project in Laos.”

Exhibit 1: Map of the Greater Mekong Subregion

Exhibit 2: Detailed Map of Existing and Proposed Dams in Laos

Source: International Rivers46

46 "Don Sahong Dam," International Rivers.

Exhibit 3: Close-Up View of the Siphandone


Exhibit 4: Thako Project Diversion Channel Proposal (proposed location indicated above)

Source: World Wildlife Fund 48 47 "Don Sahong Dam," International Rivers.

Exhibit 5: Image of the Siphandone Wetlands and the Khone Phapheng Falls


48 "Don Sahong Dam Sustainable Solutions Exist." 49 "Don Sahong Dam," International Rivers.

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