Research Report
on
Decision-making on Hydropower Development in Lao PDR
Lao Research Team MK 8
Research team:
Bounthieng Phommachanh
Bounkhong Phetdaohoung
Sypha Chanthavong
Sounthone Phommasone
National University of Laos
2013
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I. Summary
Research on the topic “ Decision-making on Hydropower Development in Lao PDR”
The purposes of the research were: (1) analyse the process of decision-making of
hydropower development, (2) to find the impact of decision-making of hydropower
development.
The research was conducted during September 2012 to October 2013 by team of senior
researchers of NUOL namely, Bounthieng Phommachanh, Bounkhong Phetdaohoung, Sypha
Chanthavong and Sounthone Phommasone.
It combined qualitative and quantitative studies. Data for qualitative are the related laws,
regulations, newspapers, and in depth interview from the academics, experts, and senior and
local government administrators as well as local people. Data for quantitative are surveying
data from resettled villages from 5 hydropower dams namely Nam Ngum 1 dam, Nam Mang
3 dam, Nam Nhone dam, Nam Ngum 2 dam and Xayaburi dam.
The main findings of research are as below:
- The decision-making of hydropower development in Lao PDR bases on Electricity
Law that was promulgated in 1997, amended in 2008 and 2012. This law provides
more decentralization to local authorities and attentive to relevance specialist. The
Environmental Protection Law, Decree on Environmental Impact Assessment,
Decree on Resettlement and Compensation People Affected by Development
Project, Agreement on the Cooperation for the Sustainable Development of the
Mekong River Basin 1995, and constructive comments from NGOs and experts was
also attentive by the Government of Lao. The Government of Lao is working hard to
implement the laws and regulations of Lao PDR and international agreements.
- The impact of decision-making, especially compensation and resettlement
correlates highly with the livelihood of affected people from hydropower
development project, especially good agriculture land compensation. Effective
resettlement is complex; it involves considerations of culture, livelihood, food
security, and economic and social development. The dam that linking with
irrigation system is preferred by downstream people. Smaller dams do not have as
many impacts. Hydropower also offers significant potential benefits. For local
people, dams can help facilitate infrastructure development, basic education
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opportunities for children, health care services, electricity, and transportation
facilities.
II. Key messages and research findings
2.1 Key message
The Lao government is improving hydropower decision-making based on past experiences.
The Government of Lao (GoL) emphasizes that hydropower development is a priority. From
the year 2006 and 2009, hydropower production increased by 9.3% per year. It occupies
15% of the country’s industrial sector and accounts for around 3% of its GDP (Ministry of
Investment and Planning, 2011: 29).
The GoL also issued many laws and regulations to prevent and address the hydropower
development issue such as: Electricity Law in 1997 and amended in 2008 and last version
2012. Environmental Protection Law in 1999 and amended in 2012, Prime minister’s decree
on Environmental Impact Assessment in 2000 and amended in 2010 as well as decree on
Resettlement and Compensation People affected by Development Projects.
In the case of decentralizing dam decision-making, the GoL has assigned power to local
authorities to make decisions on dams. District governors can make decisions on dams of
100 KW and below; provincial governors can authorize the construction of dams of between
101 KW and 15 MW; the government can authorize the construction of dams of between 15
MW and 100 MW; while the Standing Committee of the National Assembly will, on the
government’s recommendation, authorize the construction of dams with an installed
capacity of higher than 100 MW and/or a reservoir area of 10,000 ha or larger, and/or that
will cause large-scale social and environmental impacts (Research team Translated, Article
34 of Electricity Law, amended 2012).
The impact of hydropower decision-making processes is related to time, resettlement
practice, and the purpose of dam.
The evolution of Lao PDR’s treatment of affected communities, we can turn to the historical
development of hydropower facilities within the country. Construction of the Nam Ngum 1
Dam ended in 1971. The construction of this dam was based on a notify plus compensate
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scheme. No one was notified, however, and therefore, no one was compensated (Research
Team, Survey year 2013).
The feasibility study for the Nam Mang 3 Dam was conducted in 1992, construction
commenced in 2004. The compensation scheme was modified to include livelihood
restoration measures, negotiation and long term benefit sharing with local communities
including irrigation and water usage, electrification, education, road access and health
service (Research Team, Survey year 2013).
In the latest case, the Xayaburi Dam, all of the above-mentioned compensation schemes are
applied. The feasibility study was conducted in 2008, and the dam is set for completion in
2018. In addition to the direct financial compensation for the loss of agricultural land,
relocated people receive agriculture land, construction land and houses, and also receive
many indirect benefits such as road access, schools, health centres, pagodas, community
markets, professional training, livelihood restoration, career development, community
centres with social events (Laos explain its hydropower policy, Vientiane Times, 2013a).
In term of resettlement practical, even though the government of Lao has many laws and
regulations regarding this issue, but the real compensation and resettlement still occur
some problems. For example, a survey of people relocated as a result of the development of
the Nam Ngum 2 hydropower dam found that compensation was below what was planned.
The dams can help to mitigate drought. For example, the Nam Mang 3 hydropower supplies
irrigation water for more than 2,000 ha for dry season farming (Nam Mang 3 dam can
supply irrigation more than 2000 ha, Vientiane Mai Newspaper, 2013b).
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2.2 Research findings
The research findings are following:
(1) Hydropower decision-making processes are improved; because decision-making
processes of hydropower development are based Electricity Law, Environmental Protection
Law, Decree on Environmental Impact Assessment, since these laws and decree are
amended. The last amended of Electricity law provides more clearly on decentralizing of
dam decision-making, the GoL has assigned the power to local authorities for making
decisions on dam. District governors can make decisions on dams of 100 KW and below;
provincial governors can authorize the construction of dams from 101 KW to 15 MW; the
government can authorize the construction of dams between 15 MW and 100 MW, while
the Standing Committee of the National Assembly will, on the government’s
recommendation, authorize the construction of dams with an installed capacity higher than
100 MW and/or a reservoir area of 10,000 ha or larger, and/or will cause large-scale social
and environmental impact (Research team Translated, Article 34 of Electricity Law,
amended 2012).
Environmental Protection law amended in year 2013 provides clearly on Social Environment
Management and Monitoring Plans, Environmental Management and Monitoring Plan and
environmental impact assessment report and social and environmental management and
monitoring plans authority should be established. (Article 22 Environmental Protection Law
amended in 2013).
Decree on Environmental Impact Assessment was amended in year 2010 provides more
clearly on local people and stakeholders (Article 6).
The Decree on Compensation and Resettlement of People Affected by Development
Projects provides the principles of compensation that: (1) Project owners shall compensate
project-affected people for their lost rights to use land and for their lost assets (structures,
crops, trees and other fixed assets) affected in full or in part, at replacement cost. (2) Where
a significant large or entire land holding is affected by a project, namely agriculture,
residential or commercial land, compensation shall be through provision of a ‘’land for land’’
arrangement of equivalent size and productivity and be acceptable to affected people and
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project owner (Article 6.1 and 6.2, Decree on Compensation and Resettlement of People
Affected by Development Projects, No. 192/PM, date 7 July 2005:7).
The GoL has paid serious attention to criticisms from a variety of sources. Ensuring that
developers pay attention to international standards by hiring professionals and consultants
to conduct studies and seek solutions; and seeking appropriate channels to minimize
negative impacts. The Procedures for Notification, Prior Consultation, and Agreement
(PNPCA) of the Mekong River Commission are beneficial in terms of law, providing opinions,
dialogue, consultation, providing information, modelling, human resource development,
and as a reference for the government in development.
(2) By using 3 scales (-1 referenced less or worse than past; 0 as past, and 1 better than
past) found that:
Dam
Nam Ngum 1
Nam Mang 3
Nam Ngum 2
Xayaburi
1968
2002
2007
2012
None
As planed
Less than planed
Less than planed
due to not
due to
enough and poor
compensation
agriculture land.
process is not
Began the
Construction
Compensation
finish.
Agriculture land
Mean = -0.83
Mean = -0.57
Mean = -0.94
Mean = -0.71
Sd = 0.46
Sd = 0.68
Sd = 0.24
Sd = 0.68
(Less or worse)
(Less or worse)
(Less or worse)
(Less or worse)
Income
Mean = -0.5
Mean = -0.17
Mean = -0.67
Mean = -0.79
generation
Sd = 0.73
Sd = 0.91
Sd = 0.77
Sd = 0.59
(Less)
(As the past)
(Less)
(Less)
Mean = 0.1
Mean = 0
Mean = 0
Mean = 0
Sd = 0.61
Sd = 0.26
Sd = 0.60
Sd = 0
(As the past)
(As the past)
(As the past)
(As the past)
Mean = 0
Mean = 0
Mean = -0.06
Mean = 0
Sd = 0.26
Sd = 0
Sd = 0.42
Sd = 0
(As the past)
(As the past)
(As the past)
(As the past)
Social safety
Culture
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For local people, dams can help facilitate infrastructure development, basic education
opportunities for children, health care services, electricity, and transportation facilities.
For the multipurpose dam, which includes the irrigation system, fishery, transportation, or
tourism, this kind of dam is useful for nearby local people to use the water from irrigation to
paddy field, fishery, and tourism service.
For smaller dams, example Nam Nhone dam constructed in year 2010 with capacity 3 MW,
without reservoir, no resettlement and under the decision-making by Bokeo provincial
governor, no any impacts, and livelihood of local people are better because they received
good infrastructure such as: road that linking to the market that give a chance to earn more
income, access to health service and education.
III. Outputs and outcomes
The findings of this research:
(1) Presented at 3rd Mekong Forum on Food, Water and Energy in Hanoi, Vietnam
during 19 – 21 November 2013.
(2) Accepted to publish in Scientific Journal of National University of Laos Volume 7,
2013.
(3) Will disseminate to academics, decision-makers in Ministry of Energy and Mines,
Ministry of Natural Resource and Environment, Ministry of Planning and Investment,
Electricite du Laos, representative from governor of Vientiane Province, and
representative of CPWF, on 24 December 2013 at NUOL.
IV. Budget
V. Appendix
(1) Presentation at 3rd Mekong Forum on Food, Water and Energy in Hanoi, Vietnam
during 19 – 21 November 2013.
(2) Acceptance of Paper for Publishing in Scientific Journal of National University of Laos
Volume 7, 2013.
(3) Dissemination workshop proposal on 24 December 2013 at NUOL.
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