Research Report

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

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

2 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

3 4 compensate 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).

4 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

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 Began the 1968 2002 2007 2012 Construction Compensation None As planed Less than planed Less than planed due to not due to enough and poor compensation agriculture land. process is not 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) Social safety 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) Culture 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)

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.

6 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.