Lao's controversial hydro ambitions

Displaced residents seek shelter in Paksong town, Champasak province following massive flooding from the collapsed dam on 25 July, 2018. (Ye Aung Thu / AFP Photo)

Mountainous and landlocked Lao PDR, known as the "Battery of Asia", is building dozens of dams at breakneck speed so it can sell energy to power-hungry neighbours as a fast track out of poverty.

But the communist country's ambitious power plans are highly controversial.

Most energy is exported to neighbouring countries Vietnam, Cambodia and China, with the lion's share going to Thailand - whose Bangkok mega-malls alone suck up huge amounts of power.

That leaves local communities with little of the revenue from projects that often require compulsory resettlement of hundreds of villages and reshape the landscape and river systems.

The dam collapse this week in southern Lao that left at least 26 dead and scores missing has shed light on the perils of the country's big bet on hydropower.

Why so many dams?

With a vast river system, mineral-rich mines and a population of just six million, Lao is richer in natural resources than manpower.

As revenues from timber exports and gold and copper mines have tailed off, the country - and foreign investors - have ploughed billions of dollars into hydropower development, billed as a clean source of energy to electrify Lao and supply its power-hungry neighbours.

There are currently 46 operating hydropower plants with a capacity of 6,400 megawatt (MW), with another 54 under construction and set to go online by 2020, according to the Laos News Agency.

If all goes to plan, Lao wants to generate a whopping 28,000 MW of power in just two years - almost enough to power all of Thailand for a year.

It has targeted graduating from a lower-middle income country by 2020, according to its World Bank classification, and raise its annual per capita gross domestic product (GDP) from US$2,457 today.

Where does the power go?

About 85 percent of all energy generated in Lao is exported, mostly to Thailand where two-thirds of it is sucked up in and around the sweaty capital Bangkok, according to the International Energy Agency (IEA).

Almost 90 percent of Lao has access to electricity but supply can be patchy, especially in rural areas.

"Even if it could be enough... to power all the homes, it doesn't reach all the homes, so there is a gap there at the very least in terms of access," said Vanessa Lamb, geography lecturer at the University of Melbourne.

Who's making the money?

Lao's government is earning revenues by selling power to its neighbours. Although figures are not public, the World Bank says investments in the sector are not on par with how much goes towards the national budget.

The real rewards may still be decades away.

Many contracts stipulate that hydro plants - often built and operated by foreign firms, including those from China or Thailand - will be handed over to the Lao government in 20 or 30 years, according to Keith Barney, a lecturer at the Australian National University's College of Asia and the Pacific.

"Although there's been a lot of dam construction, the actual royalties and budget revenues - which are opaque - have not been that lucrative so far," he said.

"They're coming down the line as these projects move toward their mature phases."

Do local communities benefit?

Most agree that so far, revenues have yet to trickle down to village level.

Unlike in some other countries, residents are not paid a percentage of the money earned from exporting power and may suffer from hydropower projects. Villagers are routinely resettled to make way for plants and dams, and farmers have complained that diverting river water destroys farmland, while damming rivers interrupts fish flows.

An April report from the Mekong River Commission predicted that up to 40 percent of fish species in the Mekong River basin could be disrupted by dam-building in the region, a warning echoed by others.

"Poor people in the project areas are worse off because of these dams, not better off," said Ian Baird, assistant professor of geography at the University of Wisconsin-Madison.

"People aren't being properly compensated and then when the revenue comes in it's not getting back to those people," he said. - AFP