Tuesday, May 10, 2011

Laos to Ask Ch. Karnchang to Finance Mekong River Hydropower Dam Review

Bloomberg Markets Magazine
Laos will ask Bangkok-based Ch. Karnchang Pcl to pay for a review of a $3.8 billion hydropower dam on the Mekong River after downstream countries called for a delay to further study environmental concerns.
The Thai-financed Xayaburi hydropower plant is the first of about 10 dams the government plans to build on the mainstream Mekong, which runs from China’s Tibetan plateau through Myanmar, Thailand, Laos, Cambodia and Vietnam. Laos agreed last month to delay the dam temporarily.
“We are just discussing the process and then requesting the developer to finance the additional review,” Daovong Phonekeo, deputy director general of Laos’s Department of Electricity, said by phone today from Vientiane, the capital. “We are delaying the project, but not permanently,” he said.
Laos wants the study to counter criticism from Vietnam, Cambodia and Thailand that the project may disrupt fish catches and rice production downstream. Ch. Karnchang’s shares fell 2.4 percent to 8.05 baht as of the lunch break, set for its lowest close since March 21.
The cost of the review “depends on how many experts we have to hire” and should take “something like” six to 12 months to complete, Daovong said. Vietnam recommended last month that all planned hydropower projects on the Mekong be delayed for a decade.
“It will not take 10 years” to complete the study, Daovong said.

No Request

Ch. Karnchang, Thailand’s third-biggest construction company by market value, owns a 57 percent stake in the 115 billion baht ($3.8 billion) project. The company hasn’t received a request from Laos to finance the review, Supamas Trivisvavet, an executive vice president, said by phone today.
“At this moment, we haven’t heard,” she said. “But I think it’s the Laos government acquiring the independent consultant to do the review.”
The Mekong and its tributaries provide food, water and transportation to about 60 million people in those four countries. A technical review last month by the intergovernmental Mekong River Commission found that the dam may lead to the extinction of species like the Mekong giant catfish.
“Gaps in knowledge” mean the full extent of the downstream impact on fisheries is hard to estimate, it said.
Laos wants its own study to verify the findings of the commission’s work, which served as the basis for riparian countries to object to the dam, Daovong said.

Thai Demand

Thailand agreed in December to buy 95 percent of the electricity from the plant, which will have a capacity of 1,285 megawatts. PTT Pcl (PTT), Thailand’s biggest energy company, has a 25 percent stake in the project, while Bangkok-based Electricity Generating Pcl (EGCO) owns 12.5 percent, according to company filings.
China has already built four hydropower dams on the Mekong, completing the first one in 1993 without consulting its downstream neighbors. It plans to build four more as part of efforts to almost double its hydropower capacity to at least 300 gigawatts by 2020.
Southeast Asia’s smallest economy aims to use its resources to boost incomes for its 6 million citizens who comprise Asia’s youngest population. Hydropower and mining projects are set to underpin gross domestic product growth that may reach 7.7 percent this year, the Asian Development Bank said in an April 7 report.