Private equity, public affair: Hydropower financing in the Mekong Basin (original) (raw)
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Wisconsin Law Review, 2019
Project finance is a system of financing employed to fund large infrastructure facilities, and it has been a driving force of investment in undeveloped countries. While project finance's capacity to facilitate high levels of investment is facially appealing, its implementation and management illustrate an alarming accountability problem. Project finance's dispersal of risk has created a glaring accountability gap that allows project participants to systematically thrust environmental and social harms upon local communities. Moreover, because infrastructure development often occurs in undeveloped countries, host governments and third parties are often disinterested or incapable of stepping in to mitigate those harms. Nowhere are these flaws more plainly illustrated than in the Mekong River Basin, where hydropower development has sharply risen since the 1990s. This rapid and widely criticized development has caused both acute and cumulative harms throughout the Basin. Nearly one hundred dams are causing irreversible damage to the Basin's ecosystems, and the region's 60 million inhabitants are bearing the brunt of that harm through flooding, destruction of farms and fisheries, and forced resettlement. Although some of project finance's principal actors have taken steps to mitigate these harms, their efforts have largely fallen short. There is thus a critical need for a new mechanism that addresses project finance's accountability gap and holds project participants accountable for the harms inflicted upon projectaffected communities.
The Asian Development Bank and the case study of the Theun-Hinboun hydropower project in Lao PDR
Water Policy, 2006
The Asian Development Bank (ADB) is one of the most influential development institutions in the Greater Mekong sub-region in the push to build large-scale infrastructure including hydroelectric dams. Controversies over big dams in Asia have unveiled the lack of effective governance mechanisms through which all stakeholder interests can be taken into account in resource management decision making. In the case of the Theun-Hinboun hydropower project in Lao PDR, the actions of the ADB have showed inadequacies regarding the project decision making and implementation processes although the project has been economically successful and the ADB has enhanced the country's capacity build-up. The aim of the article is to review the history of the Theun-Hinboun project and identify areas that need to be strengthened recognizing future planning needs, and to identify important future lines of study at Theun-Hinboun. Good governance can be enhanced by institutionalizing participation at the p...
An analysis of China’s investment in the hydropower sector in the Greater Mekong Sub-Region
Environment, Development and Sustainability, 2013
The Mekong River's richness in natural resources offers large benefits to its populations; nevertheless it also raises the interest of foreign investors. Recently, Chinese firms, banks and government bodies have increasingly invested in large hydropower projects in the Greater Mekong Sub-Region. Due to China's rapid economic growth, its rapid industrialisation and its limited domestic natural resources, the Chinese government has issued the 'Going Out Strategy' which promotes investments in overseas natural resources like water and energy resources. In search for climate-friendly low carbon energy, cheap electricity and access to a growing market, Chinese institutions turn to Southeast Asia where Chinese institutions are currently involved in more than 50 ongoing large hydropower projects in Cambodia, Laos, Myanmar and Vietnam as contractors, investors, regulators and financiers. These Chinese institutions have influence on environmental and social practices as well as on diplomatic and trade relations in the host countries. Currently, there are major gaps in understanding in more detail who is engaged, why, how and with what impacts. This paper therefore aims to assess the motives, actors, beneficiaries and the direct and indirect impacts of China's investments in large hydropower projects in the Greater Mekong Sub-Region. The authors use the 'Rising Powers Framework' to assess these issues, which is an adapted version of the Asian Drivers Framework.
Over the last decade, Chinese State-Owned Enterprises have emerged as among the most active investors in Mekong Basin hydropower development. This paper uses a political economy analysis to examine the forces that drive Chinese State-Owned Enterprises to invest in hydropower in the Mekong Basin. We focus our analysis on the Lancang (Upper Mekong River) in China and in the Greater Mekong Subregion (GMS), with an emphasis on Cambodia. The analysis reveals how powerful political and economic forces from within China and the GMS influence the pace, location and scale of investments in hydropower. These forces include foreign exchange reserves, trade packages and foreign direct investment, and political alliances. Combining the political economy and nexus approaches, we conclude that although policies from China recognize interconnections across the nexus, political and economic forces craft narratives that downplay or disregard these nexus interconnections and trade-offs. This in turn, influences how trade-offs and interconnections in hydropower development are managed and recognized in both local and transboundary contexts, thereby, creating potentially significant negative impacts on livelihoods, food security and the environment.
Where walls of power meet the wall of money: Hydropower in the age of financialization
Sustainable Development, 2019
Their ability to absorb substantial capital makes hydropower dams attractive projects for the "wall of money." Although global webs of dynamic financial flows enable megaspatial transformations with huge temporal impacts, their opacity and fragmentation obfuscate possibilities for democratic decision making and accountability. This paper explores the question whether the interest in renewables and the ability of large infrastructure to absorb capital has changed the role of large dams as instruments of political, financial, and territorial power. An analytical framework inspired by Lefebvre's concept of "production of space" is used to examine the structural and context-specific dimensions of current hydropower development. Ultimately, we hope to contribute to an alternative conception of the landscape in which the myopic focus on capital accumulation is replaced with social and environmental justice.
Sustainability Science, 2013
Hydropower developments along the main stem of the Mekong River and its tributaries cause transboundary effects within the Mekong Basin Region, which comprises parts of six countries. On the one hand, the provision of hydropower triggers economic development and helps to meet the rising energy demand of the Mekong riparian countries, especially China, Thailand, and Vietnam. On the other hand, the negative impact of dam construction, mainly altered water flow and sediment load, has severe impacts on the environment and the livelihoods of the rural Mekong population. Several discrepancies exist in the needs, demands, and challenges of upstream versus downstream countries. Against the common apprehension that downstream countries are powerlessly exposed to mainly negative impacts whereas upstream countries unilaterally benefit from hydropower, the authors argue that upstream-downstream relations are not really clear-cut. This conclusion is based on a consideration of the complex power play between Mekong riparians, with a focus on recent power trade interactions. The article investigates the consequences of hydropower dams for the Mekong region as well as the role of supranational players, such as the Mekong River Commission and the Greater Mekong Subregion Initiative, on the hydropower debate. It is not nations that are the winners or losers in the hydropower schemes in the Mekong, but rather parts of the riparian population: a few influential and powerful elites versus the large mass of rural poor.
There are currently over 60 tributary and mainstream dams planned or under construction in Lao PDR with 95% of the electricity from these dams slated to be exported to neighbouring countries. In the Mekong basin, the structure of the Thai energy sector – the country's lack of domestic hydropower development and the current and planned power purchase agreements between Thailand and Laos – differentiates Thailand from other regional investors. Using a political ecology approach, this paper examines how powerful state and private actors from within Thailand and Lao PDR mobilise power to control the benefits from hydropower while the social and environmental impacts are largely ignored, thereby constituting a form of water grabbing. The analysis shows that the structure and politics of the Thai electricity sector, private-sector profiteering and a strong domestic civil society are driving Thailand's hydropower investment in neighbouring Laos. Thai investments are enabled by Laos' weak enforcement of laws, a lack of capacity to regulate development, the existence of corruption and a tightly controlled state. These drivers and enabling factors combine with short-term economic focused regional development to create opportunities for water grabbing. The winners of this water grabbing are the powerful actors who control the benefits, while the losers, local livelihoods and the environment, are negatively impacted.
The Economic Performance of Hydropower Dams Supported by the World Bank Group, 1975–2015
Energies, 2021
This paper assesses the economic benefits of 57 World Bank Group-sponsored hydropower dam plant investments. Hydropower dams are among the main sources for producing electricity and the largest renewable source for power generation throughout the world. Hydropower dams are often a lower-cost option for power generation in Clean Energy Transition for addressing global climate change. Despite its conspicuous aspects, constructing hydropower dams has been controversial. Considering the World Bank’s long history as the largest hydropower development financier, this study investigates its performance in supporting hydropower dams. The outcomes of this study apply to the wider hydropower development community. Of the projects in this study, 70% experienced a cost overrun, and more than 80% of projects experienced time overruns, incurring potential additional costs as a result. Despite the high cost and time overruns, this hydropower portfolio of dams produced a present value of net econom...
The politics of hydropower: developing the Mekong
Political Geography, 1999
With renewed economic interest in the Southeast Asian region following the 'peace dividend' of the early 1990s, numerous hydrodevelopment plans have been initiated in the Mekong basin. The river-as-resource, in a glibly bioregional metaphor, has been transformed from a Cold War 'front line' into a 'corridor of commerce', drawing six riparian states together in the pursuit of sustainable development through economic and infrastructural integration and cooperation, promoted by multi-and bilateral donors and lending institutions. Through a brief examination of the discursive framing of Mekong hydrodevelopment, this paper uncovers some of the implications of an emerging regional geopolitical imagination centred on the naturalising metaphor of the watershed. Through a discussion of the increasing involvement of private capital, and the politicisation of resource use, the implications of hydrodevelopment for Laos, an upstream state currently undergoing major hydrodevelopment, and Cambodia, a downstream state, are explored.