THESIS 2.2 Final

Capital or Institutions, Which Speaks More
Loudly? The Case of the Xayaburi Dam in
Lao PDR
Elisha “Eli” Powell
Faculty Mentor: Prof. Mark Giordano, Director, Program in Science,
Technology, and International Affairs
Submitted for completion and recognition of Honors Degree in the program
for Science, Technology, and International Affairs
1

Table of Contents:
Abstract……………………… 5
Introduction ………………… 6
Background ………………… 11
Challenges ………………….. 28
Methods …………………….. 47
Framework …………………. 53
Data …………………………. 57
Discussion ………………….. 64
Conclusions ………………… 74
Literature Review ………….. 79
Bibliography ……………….. 88
Supporting Materials………. access available via Google Drive (please
email powell.eli.93@gmail.com for access)
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Commonly Used Abbreviations
FDI- Foreign Direct Investment
GoL- Government of Lao PDR
IGO- International Governmental Organization
IPP- Independent Power Producer
LMB- Lower Mekong Basin
MRB- Mekong River Basin
MRC- Mekong River Commission
MoU- Memorandum of Understanding
PPA- Power Purchase Agreement
SEA Report - Strategic Environmental Assessment  
3

Acknowledgements
Three groups of people I would like to thank for their support in the past year while working on
this endeavor: 1.) Mentors 2.) Family and 3.) Friends and Teammates.
Throughout my four years at Georgetown University several professors have proved instrumental
in my decision to pursue Energy and Resource Finance as a career but none more so than Prof.
Mark Giordano. For over a year now he has helped me through the process of finding a thesis
topic, returned critical feedback, and gave support when need. This thesis would have never
come to fruition without your help.
I would also like to thank Prof. Joanna Lewis who guided me through the steps of thesis writing.
Prof. Theodore Moran also provided critical insight into the concepts of Foreign Direct
Investment, a crucial feature of this thesis.
Outside of Georgetown, I would like to thank Mr. Brian Dunn, at Hunt Alternative Energy.
Besides serving as my supervisor for a year, Brian Dunn graciously agreed to be an outside
reviewer for my thesis. During my time working with Mr. Dunn, I learned many skills
associated with this thesis behaved in the field: how to analyze power purchase agreements, what
impacts government regulations and intentions can have, and how to organize a successful
public-private venture.
I would like to thank my parents for pushing me to explore the world and my sister for keeping
me on track during the writing of this thesis.
My Friends- you have truly became my second family during these past four years. Special
shout outs to Alyssa, Aaron, Evan, Jeff, Katie, Michael, Nick, Phyu, Ralph, and Zoe. Thanks for
knowing when to make me sleep, dragging me out on bikes, and being there for me to vent.
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Abstract
With the increasing energy demand and population growth in the Lower
Mekong Basin, plans for hydroelectricity projects from the 1960s have reentered
the public discussion. Now, 10 hydropower dams on the mainstream of the
Mekong River in the lower basin have been proposed and one of which, the
Xayaburi Dam, has begun construction. The economic benefits to the region as
well as the losses have been discussed, and great uncertainties remain as to the net
outcome of hydropower development on the mainstream of the Mekong River.
Despite repeated calls from the Mekong River Commission, the Government of
Vietnam, and civil society for delays in the construction or cancellation of the
Xayaburi Dam, the project continues to move forward. This raises the question of
how much actual power of the institutions in the Mekong Region to regulate dam
development, as well as the goals of the organizations involved- the Government
of Lao PDR, foreign investors, etc.- in effecting the development decisions.
Despite extensive literature discussing the strengths and weaknesses of the
Mekong River Commission, few studies have evaluated its effectiveness in the
making an impact in the decisions of a case on the ground- the Xayaburi Dam.
Even fewer have, examined the interplay between the Government of Lao PDR,
the foreign financial support of the dam, and the current investigations in Thailand
on the future of the Xayaburi Project.
The case of the Xayaburi Dam will be examined in this light by creating a
new framework to weight in the influence of institutions, financial flows, and
development goals. This model will draw up institutional theory, business-case
analysis, and the academic literature discussing the pros and cons of dam
development in the Greater Mekong Subregion. The data for the framework
comes from the official contracts (Memorandums of Understanding, Power
Purchase Agreement, etc.) for the Xayaburi Dam, financial monitoring reports,
and the white literature documenting the official investigations ongoing about the
approval of the dam. With the dataset and the framework, this thesis hopes to
examine whether capital or institutions hold more weight in the determination of
the fate of the Xayaburi Dam.  
5

Introduction
Beginning high in the Tibetan Himalayans of China, the Mekong River surges for
roughly 4,600-km course ultimately emptying in the South China Sea, flowing through
Myanmar, Lao People’s Republic (referred to as Lao PDR in this thesis), Thailand, Cambodia,
and Vietnam. The Mekong River serves not only to link the roughly 65 million people who live
in within its watershed but also as the crucial economic engine of the region, and in particular the
lower basin. The Lower Mekong Basin has several definitions, in the context of this thesis, it1
will be limited to the four full member states of the Mekong River Commission- Lao PDR,
Vietnam, Thailand, and Cambodia. In recent years, the historical trading patterns between the
four countries of the Lower Basin, with Thailand and Vietnam looking to Lao PDR and
Cambodia for resources, have come under strain due to the expansions of the Thai and
Vietnamese economies and Lao PDR’s and Cambodia’s desire to raise their populations’
historically low standards of living. The development of hydroelectricity projects on tributaries2
of and on the Mekong itself have been viewed as mechanisms to helps satiate the demand for
greater energy usage in Thailand and Vietnam while helping Lao PDR and Cambodia climb the
ladder of development. While maintaining the exploiter-exploited dynamic between the
countries, the relationships between the four riparian nations will be permanently altered with the
development of mainstream dams as these will irreversibly transform the environment of the
Mekong River Commission. 2010. State of the Basin Report 2010. Mekong River Commission,1
Vientiane, Lao PDR.
Bakker, Karen. "The Politics of Hydropower: Developing the Mekong."Political Geography 18.2 (1999): 209-32.2
JSTOR. Web. 23 Apr. 2014.
6

Lower Mekong Basin.3
Hydropower development of the Lower Mekong Basin, however, could either help the
region pull itself out of poverty or plunge it deeper into stress with further environmental
degradation triggering the loss of key resources. Tapping the electricity generating capacity of
the main-stem Mekong in the lower basin has received renewed attention in recent years as the
pace of development in the region has rapidly increased in the past decades. Chiefly due to the
economies of Thailand and Vietnam, followed by Lao PDR and Cambodia, power demand in the
Lower Mekong Basin (henceforth referred to as the LMB) is expected to grow at 6-7% annually
until 2025 according to the Mekong River Commission. By 2025, estimates hold the regional4
energy demand will exceed 820,000 GWh/year; annually, this amounts to about one-fifth of the
U.S. electricity consumption of 3.856 million GWh in 2011. Hydropower has becoming5
increasingly attractive to the countries of LMB to meet this uptick in demand due to its lack of
greenhouse gas emissions, moves to reduce dependancies on imported energy, efforts to diversify
the energy mix, and the rise of China in the global commodities markets. In meeting these goals,
the construction of eleven dams on the mainstream in the LMB countries have been proposed.
The Xayaburi Dam, though the third in the planned cascade of dams, as the first dam scheduled
for completion, with construction scheduled to finish sometime in 2019, and will set the pattern
See 23
Mekong River Commission. 2010. Summary of the Final Report: Strategic Environmental Assessment4
of Hydropower on the Mekong Mainstream. Hanoi, Vietnam. Mekong River Commission
"Use of Electricity." - Energy Explained, Your Guide To Understanding Energy. EIA, 26 Apr. 2012. Web.5
23 Apr. 2014. <http://www.eia.gov/energyexplained/index.cfm?page=electricity_use>.
7

for future projects on the Mekong River below the Chinese-Laotian border6
Thailand and Vietnam, the two largest economies in the lower basin, are expected to buy
nearly 90 percent of the electricity generated by projects on built the mainstream. The7
development of hydroelectricity projects attracted the most interest in Lao PDR, which could not
only receive massive economic rents but also stands to become a rentier state via the export of8
electricity. However, the proposed dams could destroy vital resources and economic
opportunities derived from the fisheries and the forests. In the waters of the lower basin alone,
around 2 million tons of wild fish are caught, worth over US$2.1 billion at first sale and over US
$4.2 billion at retail markets. These figures are representative of the largest inland fishery on the
planet as well as the basis of millions livelihoods and the primary source of protein and micro-
nutrients for around 60 million individuals. Beyond its monetary value, the fishery counts9
upwards of 800 species of fish making the Mekong River Basin the second most biodiverse river
in the world after the Amazon.10
The demands for hydropower and food continue to increase with population growth in
the rather unregulated Mekong Basin, placing increasing pressure on the environment and the
King, Daniel. "Regulating Social and Environmental Risk in ASEAN: The Xayaburi Dam Project in Lao6
PDR and Thai Banks." Ed. Cynthia Morel. Business and Human Rights in Southeast Asia: Risk and
Regulatory Turn. Ed. Mahdev Mohan. London: Routledge, 2015. 99-120. Print.
See 47
Rentier States are countries in which the state is not support by society but rather economic rents from exploitation8
of a resources (e.g. oil, minerals, etc.)
Dugan, Patrick. Blue Harvest: Inland Fisheries as an Ecosystem Service. Penang, Malaysia: WorldFish Center,9
2010. UNEP. United Nations Environment Programme, 2010. Web. 28 Mar. 2015.
Ziv, G., E. Baran, S. Nam, I. Rodriguez-Iturbe, and S. A. Levin. "Trading-off Fish Biodiversity, Food Security,10
and Hydropower in the Mekong River Basin." Proceedings of the National Academy of Sciences 109.15 (2012):
5609-614. Web.
8

impetus for decisions to be made about the trade-offs between electricity access, food security,
and ecological protections. The amplification of development in the Mekong basin coupled with
unilateral decisions made by state actors has already created tensions, especially over dam
development and its spillover effects, and will continue to play out in the next five to ten years.11
The history and current construction of the Xayaburi dam project in Lao PDR clearly illuminates
these tensions and will serve- for better or worse- as the model for further hydropower
developments on the mainstream of the Mekong.
Although the Strategic Environmental Assessment (SEA Report) commissioned by the
Mekong River Commission calling for ten year halt in the development activities on
hydroelectricity projects on the mainstream of the Mekong, the construction of the Xayaburi dam
continues. The already contentious project’s future became even more uncertain with the12
launching of Thai investigations into the Power Purchase Agreement (PPA) for 95% of the
electricity generated signed between a Thai stated owned electricity group and the Lao PDR
located Xayaburi Power Company, Ltd., the owner of the dam. The launching of these still
ongoing inquiries centers around if the approval by regulators was in compliance with Thai law
as well as a lawsuit challenging the constitutionality of the PPA for the electricity produced at the
site. If the contract is canceled by the Government of Thailand, will construction finish on the13
Kirby, Mac, Chayanis Krittasudthacheewa, Mohammed Mainuddin, Eric Kemp-Benedict, Chris Swartz, and11
Elnora de la Rosa. "The Mekong: a diverse basin facing the tensions of development." Water International 35, no. 5
(2010): 573-593.
King, Daniel. "Regulating Social and Environmental Risk in ASEAN: The Xayaburi Dam Project in Lao PDR13
and Thai Banks." Ed. Cynthia Morel. Business and Human Rights in Southeast Asia: Risk and Regulatory Turn. Ed.
Mahdev Mohan. London: Routledge, 2015. 99-120. Print.
9

Xayaburi dam? Have the current and historical political and development goals set the Lower
Mekong Basin on irreversible path?  
10

Background
The Geography and Ecology of the Mekong Basin
As one of the most biodiverse, productive, and interconnected river basins in the world,
the Mekong River basin occupies a position apart. The river itself traverses many of the varied
landscapes of South East Asia. Originating at an altitude of over 4500 meters in Qinghai
province in China, the Mekong then flows for roughly 4600 kilometers to its delta with the South
China Sea. The geography of the basin ranges from a high mountain plateau at the source; to14
the tropical forested hilly upper middle reaches; through heavily settled, agricultural lower
middle regions; and finally, the flat irrigated floodplains of the Mekong Delta (the main area of
irrigation in the basin). The basin spans over 795,000 square kilometers and has a flow of over15
475 million cubic meters during the wet season. Figure 1 displays the shape of the Mekong
River Basin (MRB), the breadth of its watershed, and its location within Southeast Asia. Further,
the map illustrates how the Mekong basin does not fan out but rather follows a relatively narrow
path down from its Himalayan source in China to its delta in Southern Vietnam. This quirk of16
geography helps to explain the vital role the river plays in linking up and downstream
communities due to the mountains which surround the river valley; creates a massive potential
for hydropower generation and development of water resources; and contributes to the unique
MacQuarrie, Patrick. 2012. Managing Conﬂict on the Mekong: Sharing Data, Experience, and14
Capacity with the Columbia River Basin. Oregon State University.
Kirby, Mac, Chayanis Krittasudthacheewa, Mohammed Mainuddin, Eric Kemp-Benedict, Chris Swartz,15
and Elnora de la Rosa. "The Mekong: a diverse basin facing the tensions of development." Water
International 35, no. 5 (2010): 573-593.
See 216
11

ecology of the
Mekong system which
hosts the largest inland
fishery in the world.17
The strong seasonality
of rainfall in the basin
remains tied to the
onset of the monsoon
rains over Indochina.
Typically the rains
arrive mid to late May
and last until October,
forming the wet
season in the Basin.
From November until
the beginning of May,
the MRB experiences its dry season, which is especially felt in Northeastern Thailand where
regional water shortages occur. In the Chiang Saen region of far north Thailand, where the18 19
See 217
see 218
Lau, K. M., and Song Yang. "Climatology and Interannual Variability of the Southeast Asian Summer Monsoon."19
Advances in Atmospheric Sciences 14.2 (1997): 141-62. Web. 29 Mar. 2015.
12
Figure 1: Outlines the shape of the Mekong River Basin’s watershed, the
international boundaries, and the locations of major cities

river transitions from upper to lower basin, the flow hovers around 2.5km3/month in the dry
months but increases to about 10.0 to 20.0 km3/month in the wet season. Farther downstream at
Phnom Penh in Cambodia, not too far from the delta, the flows vary from 6.0-10.0 km3/month in
the dry season to 60.0-90.0 km3/month at the height of the wet season. Further, in May and20
June, snowmelt in the upper catchments of the Mekong Basin acts as the primary source of
inflows; then as the summer monsoon rains pick up from July until October, they serve as the
key source of inflows, notably in Lao PDR and the highlands of Vietnam. To add, the upper21
basin in China only contributes 16-20% on average to the total flows of the Mekong; thus lessing
the downstream impact of Chinese dams on the Mekong (the Lancang River in Yunnan Province,
China). However, the left bank group of tributaries known as the 3S in Lao PDR, Vietnam, and
Cambodia contribute on average 55% of the total annual flow of the Mekong.22 23
This pronounced seasonality in flow creates the physical conditions favorable for water
resources development but more importantly the structure and function of the wetlands of the
Mekong Basin are closely linked to this pattern. A 10 meter or higher difference between the
flow during the wet season to the dry season can exist. These fluctuations in river flow alter the
structure of the river and the functionality of the wetlands, which in tandem help make the
see 220
Pech, Sokhem. "Water Sector Analysis." The Water-food-energy Nexus in the Mekong Region: Assessing21
Development Strategies considering Cross-sectoral and Transboundary Impacts. Ed. Alex Smajgl and John Ward.
New York: Springer, 2013. Print.
The 3S system of rivers consist of the Se Kong, the Se Song, and the Sre Pok found in Lao PDR, Vietnam’s22
central highlands, and Cambodia
see 1423
13

Mekong such a productive fishery.24
Though home to an extremely diverse fish population, the species which inhabit the
Mekong can roughly be spilt into two groups: long-distance migratory and non-migratory
species. The life-cycles of many of the migratory fish species in the Mekong as well as25 26
adjacent coast zones correlate with the annual cycle of oscillations in the river’s hydrological,
nutrient, and sediment regimes. During the dry season, fish return to the deep pools for shelter,
and return to the breeding and feeding grounds on the floodplains during the wet season. The
flood pulse and its associated morphology changes are paramount to the productivity and the
sustainability of the Mekong Basin. In sum, the elevation and the duration of the annual flood
are central drivers to the ecology driving fish production, as seen by the case of the Tonle Sap.27
The Tonle Sap is an example of how the geography and the seasonal flow changes
interact to impact the ecology of the Mekong. The contributions of the lower basin to water
volume in the main stem and the seasonality in river levels of the Mekong combine to produce
the unique characteristics of the Tonle Sap, a combined lake and river system in Cambodia. At
Phnom Penh, the capital of Cambodia, the Mekong and the Tonle Sap meet. During the wet
season, the river portion of the Tonle Sap carries water to the Tonle Sap Lake (or Great Lake).
Consequently, the lake expands from a size of around 2,500 km2 to approximately 16,000 km2.
See 924
Includes species which perform limited lateral migration or fish who migrate between the river and lakes (e.g. the25
Tonle Sap).
5609-614. Web.
See 2127
14

Then as the dry season sets in, the Tonle Sap reverses flow and drains the floodplains of the
lake. The rhythms of the Tonle Sap system result in not only its rich fishing grounds, but also a28
biodiversity hot spot and a major fish breeding grounds.
The productivity of the Tonle Sap, however, as a fishery is tied to the variable size of the
annual flood. Data from 1995-2005, collected from the lake’s fishery, show a strong29
interdependence between the water level, the area of the inundated land, and the size of the catch
in the Tonle Sap system. When these catch figures were compared to the Mekong River flood30
levels, it was found that higher floods and the associated increases in Tonle Sap floodplain
sediment and inundation area, raised the survival and growth rates of fish as well as the catch
yields.31
The same geographic features of the Mekong Basin which contribute to the high
productivity of the fisheries also contribute to its massive hydropower generating potential and
other developments of water resources. Due to its relatively narrow basin footprint (see figure 1)
as well as the steep elevation gradient found for long stretches of both the main stem and
tributaries, the opportunities for dam construction for impoundment and hydroelectricity
generations abound. Hydropower developments in the Lower Mekong Basin could not only32
see 2128
Fullbrook, David. ”Food Security in the Wider Mekong Region." The Water-food-energy Nexus in the Mekong29
Region: Assessing Development Strategies considering Cross-sectoral and Transboundary Impacts. Ed. Alex Smajgl
and John Ward. New York: Springer, 2013. Print.
Baran, Eric. Cambodian Inland Fisheries: Facts, Figures and Context. Penang, Malaysia: WorldFish Center, 2005.30
2005. Web. 15 Feb. 2015.
Catch and Culture. 2005. Fisheries research and development in the Mekong Region, Vol. 11, no. 1, issue of May31
2005, fishery programme. Vientiane: Mekong River Commission Secretariat.
Smajgl, Alex, and John Ward. "Mekong Region Connectivity." The Water-food-energy Nexus in the Mekong32
Region: Assessing Development Strategies considering Cross-sectoral and Transboundary Impacts. New York:
Springer, 2013. 1-18. Print.
15

provide much need electricity for the region but also could help smooth out the sharp seasonal
variations in flows and provide much needed flood control. To add, the hydropower
developments could allow for increased irrigation of crops and intra-basin diversions. However,
reductions snowmelt and increasing variability in the monsoon rains due to global climate
change would threaten these additional benefits of the dams on the main stem of the Mekong.
The uptick in the unpredictability of the climate could challenge the flood protections of the
dams which are based off the assumptions of preventing a 1 in 100 to 500 year flood. Further,33
the wet season high level of the Tonle Sap will reduce by 5-10% or roughly 600 km2 and other
changes will influence the ecosystem, farming productivity, and fish migration.34
The Political and Human Geography of the Lower Mekong Basin
As of today, the only dams completed on the main-stream of the river exist in China.
Regardless, the Mekong still flows freely through the remaining five riparian states- Myanmar,
Lao PDR, Thailand, Cambodia, and Vietnam. In turn, with several stakeholders, any change35 36
or development along the length of the river which would significantly impact the ecology and/or
the surrounding environment will have trans-boundary impacts; a dam built in one country will
have spillover effects in the other nations of the LMB, making hydropower development of the
Sokhem, Pech, Kengo Sunada, and Satoru Oishi. "Managing Transboundary Rivers: The Case of the Mekong33
River Basin." Water International 32.4 (2007): 503-23. Web. 29 Mar. 2015.
see 934
Note: Myanmar only share a border with the mainstream of the Mekong and has planned no dam construction on36
the main stem to date.
16

Mekong a discussion of international importance.
Formerly oppressive governments and decades of war and civil strife have ‘spared’ the
LMB from the interruption of natural flow patterns and protected underlying ecosystem services;
unlike most other major trans-boundary river systems in the world which have been extensively
developed for flood control, water diversions, irrigation, and power generation. Thus, the
Mekong basin, comparatively, continues to support high levels of aquatic biodiversity, while
allowing for roughly 2.1 million individuals to heavily rely on the river’s environment services-
fishing, farming, and grazing- for their incomes.37 38
While the Mekong serves as rich source of fish as well as providing a means of transport
and a massive supply of water for irrigation and drinking water, the Lower Mekong Basin still
faces resource challenges. Chiefly, the population of the LMB is estimated at around 60 million,
but most live in moderate to extreme poverty according to measures by the UNDP’s Human
Development Report. Roughly 29.6 million people live and work within 15 km of the Mekong39
River in the LMB and of these, some 2.1 million are the local riparian communities situated 5
km or closer to the river and are most at risk to the direct and indirect impacts of the mainstream
dams.40
The main resource issue remaining in the region lies in Lao PDR and Cambodia where
10 million people or 20% of the region’s population lack access to electricity. In turn, this traps
see 237
MacQuarrie, Patrick. 2012. Managing Conﬂict on the Mekong: Sharing Data, Experience, and Capacity with the38
Columbia River Basin. Oregon State University.
See 1540
17

many in poverty. However, the trans-boundary nature of the Mekong basin and its associated
hydroelectric potential could either help to alleviate or could exacerbate the poverty in the region
via greater electrification rates.41
Regardless of any future development, the Chinese have already dammed the mainstream
Mekong six times (with an additional dam planned for construction) in conjunction with 41 other
dams on tributaries throughout the basin. These projects have already made impacts on the
ecology of the river. The Chinese dams have the affect of dampening the flood surges in the wet
and transition seasons- which are believed to be key for the proper functioning of the Mekong
ecosystem. However, they also serve as storage reservoirs allowing for water to be held in the
wet season and later released in the dry season; this yields a more uniform year round flow
pattern for downstream hydroelectricity developments, easing their operations and making future
projects more viable.42
Whether further dam construction proceeds or not, the Lower Mekong Basin (LMB), will
face enormous environmental challenges in the future. The UN Environmental Program predicts
several negative impacts in the region due to two percent population growth over the next 50
years, increased environmental degradation, and only 31 percent of its original forests intact;
these effects will be in seen in stream flow, pollution, reductions of habitat, fish stocks, and
public health for those who rely on the Mekong for their livelihoods . The additional43
hydroelectric facilities will exert increased pressure on the area’s forest resources, which a large
See 1841
Mekong River Commission. 2010. Summary of the Final Report: Strategic Environmental Assessment of42
Hydropower on the Mekong Mainstream. Hanoi, Vietnam. Mekong River Commission
see 1243
18

portion of the rural power depend upon. This ties into the poverty-environment nexus, which44
can either form a vicious cycle of poverty when development degrades the environment or
virtuous cycle pulling people out of poverty when faced with the input of private investment.
The proposed dams, which will further degrade the environment, will also chiefly be financed
via private investors or outside groups mentioned already.
The Fisheries of the Mekong
The extensive fisheries of the Mekong serve as a prime example of the connected nature
of the LMB ecosystem and populace. The capture fisheries of the Mekong not only collectively
form the world’s largest inland fishery , but also supply a large amount of animal protein to the45
countries of the LMB. For example, the inland fisheries of the basin provide over 80 percent of
animal protein to the population of Cambodia, 48 percent in Lao PDR, and 59 percent in
Vietnam. To further quantify the size of this fishery, the 2000 baseline measure found the size of
capture fishery production at around 2,100,000 tonnes just in the LMB or almost 3 percent of the
total world capture with an associated value greater than US$2 billion per year at first sale and
over US$4 billion at retail. These massive quantities of fish harvested from the basin not46 47
Keovilignavong, Oulavanh. 2013. Private Investment in the Resources Sector and the Poverty44
Environment Nexus (PEN) in Laos. Doctor of Philosophy. University of Sydney
MacQuarrie, Patrick. 2012. Resilience of large river basins: Applying social-ecological systems theory,46
conﬂict management, and collaboration on the mekong and columbia basins. Doctor of Philosophy.
Oregon State University.
Dugan, Patrick. Blue Harvest: Inland Fisheries as an Ecosystem Service. Penang, Malaysia: WorldFish Center,47
2010. UNEP. United Nations Environment Programme, 2010. Web. 28 Mar. 2015.
19

only form the backbone of millions of peoples’ livelihoods but also the bedrock of their diets as
well. In Cambodia alone, more than 1.6 million people rely on the fisheries for their incomes.48
Part of the reason why the Mekong fisheries have such high productivity can be attributed to the
unique hydrology of the Tonle Sap River. The magnitude of the annual flood of the Tonle Sap
directly correlates with the annual fish production, as described earlier. Besides the high49 50
productivity of the Mekong Basin, the ecosystem is a biodiversity hotspot counting over 850
species in its waters. Many of these fish species are migratory and rely upon the changing water
levels tied to the wet and dry seasons to signal when to move to breeding grounds, such as the
Tonle Sap, or to more nutrient rich areas. 51
Controversy Associated with Large Dams and Potential Effects on the Mekong
Large dams serve as the main method for water control and development- in essence,
man has tamed the rivers. The International Commission on Large Dams defines these projects
as dams whose height exceeds 15 meters. The construction of large dams grew rapidly52
See 849
5609-614. Web.
Large Dams are deﬁned to have wall heights greater than 15 m; major or giant dams meet one of three52
criteria: height over 150m, dam volumes in excess of 15 million m3, or reservoir storage over 25 km3.
Fragmentation and Flow Regulation of the World's Large River Systems Christer Nilsson, Catherine A.
Reidy, Mats Dynesius, and Carmen Revenga Science 15 April 2005: 308 (5720), 405-408
20

following World War II. Dam construction peaked in the 1970s and began to fall in the 1980s.
The wish to harness water to increase economic development and improve the standard of living
spurred this rapid expansion and was permitted by increased financial and technical abilities. The
drop in the number of large dams built often is attributed to the growth in both the recognition
and criticism of the social and environmental externalities associated with the projects as well as
the lack of further suitable dam sites. Regardless of the harmful impacts of large dams, positive
impacts on key measurements of economic development and food security can be traced back to
their construction and usage. According to UNESCO, dam construction allowed for per capita
water withdrawals to mirror the demand caused by a growing global population. To add, the
increased construction allowed for the promulgation of the high yield variety seeds of the Green
Revolution, resulting in an average food supply above the per capita malnutrition threshold for
the entire globe.
Those in favor large hydropower dams, similar in style to the proposed projects on the
mainstream Mekong in the lower basin, point to many additional benefits- decreased utilization
of fossil fuels, flood control, irrigation, urban water supply, inland water, technological progress,
and job creation as noted above. In the case of the Lower Mekong Basin projects, the positive
impacts will center around economic development rather than food security or increased water
supply unlike many other mega-dam ventures. Following the global trend of great private-sector
investment in hydropower, the financing of the construction of the 11 proposed projects (note:
construction of the Xayaburi dam has begun) will come from either private firms, public-private
partnerships, and/or other countries in the region (e.g. Public Thai companies are footing the
majority of the bill for the Xayaburi Dam in Lao PDR, see “Challenges” and “Framework” for
21

more information). With this comes a greater emphasis on financial rather socioeconomic
analysis. In other words, the external costs are often ignored and the monetary cash flows are
given greater precedence. For the LMB, this means less analysis in regards to the revenue53
generating capacity of the mainstream fisheries as well as other environmental/natural goods and
how their economic effects diffuse through the population.
Further, the budgets to construct these large dams systematically fall below the actual
cost of construction- after excluding inflation, substantial debt servicing, environmental, social
costs. Not only can dams create harmful cost overruns, but also the economic justification for54
their very construction often employs flawed logic. Dam building can even result in net losses,
rather than the gains promised. For example, Prasert Marittanaporn, a senior executive at the
construction firm in charge of the Xayaburi project has stated for each one-year delay, the total
cost will rise by nearly 30 billion Thai baht or roughly US$92 million.55
The Hadejia-Jama’are River Basin in Northern Nigeria serves as an example of when
dams damage the economy. In Northeast Nigeria, a vast floodplain exists where the Hadejia and
Jama’are Rivers meet to form the Komadugu Yobe River. In this area, the floodplain and
wetlands- which remain dry for some or all of the year- provide essential income and nutritional
benefits stemming from agriculture, grazing resources, forest products, fuel-wood, and fishing
for the local populations. However, the upstream water developments (dams and irrigation
Atif Ansar, Bent Flyvbjerg, Alexander Budzier, Daniel Lunn, Should we build more large dams? The53
actual costs of hydropower megaproject development, Energy Policy, Available online 10 March 2014,
ISSN 0301-4215, http://dx.doi.org/10.1016/j.enpol.2013.10.069.
See 5354
POLKUAMDEE, NUNTAWUN. "Fish Fix Adds B10bn to Xayaburi Cost." Bangkok Post. Bangkok Post, 3 Feb.55
2015. Web. 30 Mar. 2015.
22

projects) combined with drought have placed increasing pressure on the floodplain; it was
estimated that the full implementation of the upstream dams and the irrigation regimes would
generate net losses around US $20.2-20.9 million per annum. Of the chief reasons these losses
have been seen stem from the lack of complete knowledge of the river system (changes in
seasonal morphology, fish migrations, etc.) before the construction of the various projects in the
Hadejia-Jama’are River Basin. The current construction of the Xayaburi Dam in Lao PDR56
mirrors this disturbing trend; armed with incomplete knowledge, the builders believe they can
mitigate any potential negative externality without fully understanding the dam’s effects.
On the Mekong River, the effects of the mainstream dams will have significant net
negative impacts on the fisheries due to altering the annual flood pulse rhythm of the basin. This
stems from the fact that the overall effect if the cascade of dams are built, the free-flowing river
will be replaced by a chain of large reservoirs. In turn, the migratory fish species will not only
face tougher journeys up and downstream but also the signals to migrate- changes in nutrient,
sediment, and flow levels- will be altered. Even the most conservative estimates paint a bleak
picture with the fall in fish catch associated with construction of the mainstream dams exceeding
the total livestock production of Cambodia and Lao PDR.57
The Mekong River Commission
The trans-boundary nature of the Mekong has long spurred the need and development of
river basin institutions as platforms for regional cooperation. The first instance of such an
Barbier, E. B. (2003). Upstream dams and downstream water allocation: The case of the Hadejia- Jama'are56
Floodplain, Northern Nigeria. Water Resources Research, 39(11) doi:http://dx.doi.org/10.1029/2003WR002249
See 1657
23

organization dates to 1957 and the establishment of the Mekong Committee; the creation of this
forum received strong support from the United States and was facilitated under the umbrella of
the United Nations Economic and Social Commission for Asia Pacific (UN-ESCAP). After58
1975, the Mekong Committee (MC) dissolved due to the withdrawal of Cambodia; in 1995,
following the signing of the ‘Agreement on the Cooperation for the Sustainable Development of
the Mekong River Basin’, the former MC effectively transformed into the Mekong River
Commission (henceforth the MRC). The MRC, as was the former MC, is comprised of the
governments of Lao PDR, Cambodia, Thailand, and Vietnam (China and Myanmar are dialogue
partners but not full members of the MRC).59
Per the legal agreement in 1995, the Mekong River Commission is divided into three
parts: 1.) the Council 2.) the Joint Committee and 3.) the MRC Secretariat. Each year, the water
and environment ministers (or cabinet level officials) from Cambodia, Lao PDR, Thailand, and
Vietnam meet to confer about arising issues in the LMB. Forming the Council, these ministers
debate and reach mutual decisions on the management and development of water and related
resources per the 1995 Mekong Agreement. With these decisions in hand, the Joint Committee,60
composed of senior officials of at least Head of Department level of the four countries, works to
turn policies into actions. All technical and administrative functions of the MRC fall under the
authority of the MRC Secretariat (MRCS), run by a Chief Executive officer. (Figure 2 outlines
Suhardiman, Diana, Mark Giordano, and François Molle. "Scalar Disconnect: The Logic of58
Transboundary Water Governance in the Mekong." Society & Natural Resources 25.6 (2012): 1-15. Print.
see 2359
"Mekong River Commission." Organisational Structure. Mekong River Commission, n.d. Web. 30 Mar. 2015.60
24

the relationships between the three
bodies.)61
With the
establishment of the
Mekong River
Commission in 1995, the
guiding principles of
cooperation between the
member states and rules
for the fair usage of the
basin’s water resources
were also agreed upon.
Under these rules, all
four members of the
MRC must approve any
dam development on the
mainstream. However, the current construction of the Xayaburi dam highlights the lack of62
enforcement the MRC has over its member countries.
See 3061
Jacobs, Jeffrey W. "The Mekong River Commission: Transboundary Water Resources Planning and Regional62
Security." The Geographical Journal 168.4 (2002): 354-64. Web. 30 Mar. 2015.
25
Figure 2: The organizational structure of the Mekong River Commission;
provided by the MRC on the website. See footnote 45.

The energy demand-supply scenarios for the future
As previously stated, energy demand in the region will grow, especially as Thailand and
Vietnam continue to diversify their growing economies and shift away from a reliance on
agricultural goods to manufacturing and services. The Mekong region, as whole, has witnessed
high economic growth rates- expanding by 8 percent annually from 1993 to 2005. The Asian
Development Bank predicts the demand for power will grow roughly by 6-7 percent per year up
to 2025 due to the continuing development in Lao PDR and Cambodia and the diversification of
the economies of Vietnam and Thailand. Although figures from the Asian Development Bank
(ADB) and national power demand forecasts differ, they both agree a substantial increase will
occur. The MRC estimates place the peak demand to exceed 130,000 MW by 2025 for the four
countries of the LMB (Lao PDR, Cambodia, Vietnam, and Thailand).63
This increase in demand for energy, however, will not occur at the same rate for each of
the four LMB countries. Per the Strategic Environmental Assessment conducted by the Mekong
River Commission, 96 percent of the power demand up to 2025 results from just Vietnam and
Thailand. In 15 years, Thailand expects its energy demand to double; Vietnam projects a near
quadrupling of its needs over the same timeframe. If all 12 mainstream dams are built, they
would generate a significant portion of the power generating capacity in the region. However,
the dams on the mainstream of the Mekong would only account for 11% of the additional
installed capacity for the LMB; they would contribute about 8% of the power demanded in the
LMB in 2025 (see figure 3).
26

Options to meet this growing demand in the Lower Mekong Basin face several
constraints and limited outside of hydroelectricity generation or importing hydrocarbons. To
grow their energy sector, Thailand has few choices beyond demand-side management; the
government has already started to institute savings of just shy of 10 percent peak energy use.
Further, the country’s reserves of natural gas are not only limited but also even the most
optimistic estimates show they will be depleted in 15 years. Further, the Lower Mekong64
Basin’s two largest economies face stiff competition for the importation of oil, natural gas, etc.
due to their proximity to China and Singapore as well as the growing economies of Indonesia
and Malaysia.
27
Figure 3: From the MRC Strategic Environmental Assessment released in October 2010. Shows the
breakdown per country for power demand by 2025

Challenges
28
Figure 3: The above map illustrates the locations of all planned and under construction dams on the
mainstream of the Mekong from the Strategic Environmental Report (2010) as well as the 6 zones used as
an organizational too by the Mekong River Commission.

The Mekong Project
The interest of developing the Lower Mekong Basin (LMB) for hydropower and
irrigation purposes arose in the aftermath of World War II and the decolonization of French
Indochina. Created in 1947 to assist in the development of Southeast Asia, the United Nations
Economic Commission for Asia and the Far East (ECAFE) worked with the four lower riparian65
states of the Mekong- Lao PDR, Cambodia, Thailand, Vietnam- to release a study in 1952. This
report emphasized the basin’s noted potential for hydroelectricity and irrigation development;
however, no actions could be taken until after 1954 when the Geneva Accords ended the strife in
the region. Soon after, the U.S. Bureau of Reclamation completed a report on the development66
of the LMB in 1955-56 urging not only joint management for planning development of the river
but also the need for data collection to aide in this process. A 1957 ECAFE study echoed the
earlier optimistic studies, highlighting the harnessing of the main stem would permit the
production of hydroelectricity, reduce the threat of flooding, and expand the area of irrigable
land. It also reemphasized the need for close cooperation between the four riparian states of the67
LMB. Later in September 1957, the Mekong Committee was formally established between Lao
PRD, Cambodia, Thailand, and Vietnam.
Even during the 1960s and 70s and the associated period of warfare and violence in the
region, the Mekong Committee (the forerunner to the Mekong River Commission of today)
Note: United Nations Economic and Social Commission for Asia Pacific (UN-ESCAP) and ECAFE are one and65
the same.
Wolf, Aaron T., and Joshua T. Newton. "Case Study of Transboundary Dispute Resolution: The Mekong66
Committee." Case Studies | Water Conflict Management and Transformation at OSU. Institute for Water and
Watersheds at Oregon State University, 2007. Web. 01 Apr. 2015.
see 6667
29

continued to devise plans for developing the water resources of the mainstream Mekong to jump-
start economic growth in the LMB. These plans centered around the Mekong Project, a68
cascade of 10-12 large dams built on the main-stem of the river and if constructed would produce
over 20,000 megawatts of power, store massive quantities of water, and provide flood control for
the basin; The Columbia and Tennessee River Basins served as models for this concept. The
goal of this project- create a modern river which could provide economic and social benefits to
the residents of the LMB. While not implemented in the 1960s and 70s due to the geopolitical69
situation- chiefly due to the withdrawal of Cambodia from the compact in 1975 and the U.S.
ending its involvement and funding- the project plans largely ignored the environmental and
social ramifications of radically transforming the river.70 71
The early 1990s, with a stabilizing political climate in the region , the Mekong Project72
reentered the minds of the four riparians of the LMB. Then, in 1995, Cambodia, Lao PDR,
Thailand, and Vietnam each signed ‘Agreement on the Cooperation for the Sustainable
Development of the Mekong River Basin’, formally establishing the successor to the Mekong
Committee, the Mekong River Commission (MRC). With a platform for dialogue and planning73
reestablished, discussion of implementing the Mekong Project also restarted. In the past decade,
Progress was made on the development of some of the Mekong’s tributaries though as exemplified by Thailand68
and Lao PDR working together on plans for the Nam Ngun River.
Sneddon, Chris. 12/2007. Power, Development, and Institutional Change: Participatory Governance in the Lower69
Mekong Basin, World development, 35(12), 2161 - 2181-2181
see 6970
see 6671
End of hostilities in Cambodia in 199172
Suhardiman, Diana, Mark Giordano, and François Molle. "Scalar Disconnect: The Logic of Transboundary Water73
Governance in the Mekong." Society & Natural Resources 25.6 (2012): 1-15. Print.
30

increasing interest in developing the water resources of the Mekong has gained momentum due
to the predicted energy demand in the LMB.
According to MRC as well as original Mekong Project plans, 12 dams had been proposed
for construction on the main channel of the Mekong River; now only 10 dams on the main stem
will be considered for development, with the cancelation of plans for a dam in southern Zone 4
(see figure 3, in Challenges) of the Mekong Basin and the ongoing construction of the Xayaburi
dam. Of these 11 dams, 10 will be located in Lao PDR and the remaining one in Cambodia. This
stems from the disparity in hydropower potential between the countries of the LMB, which can
31
Figure 4: Chart showing the number hydropower projects, their electricity generating capacity and the
associated investment per country of the LMB

be seen in the above chart (see figure 4). While, it shows the total capability for hydroelectricity
development in the Lower Mekong Basin (not just the mainstream), one can see Lao PDR clearly
has the lion’s share of hydropower capacity (See figure 4).74
Dam Development in the Mekong: Pros and Cons and Regional Impacts
As with any major development regime, disputes over the impacts- both negative and
positive- exist surrounding the current iteration of the Mekong Project. While dam development
has begun on many of the tributaries of the Mekong, the implementation of the plans for
damming the main stem has just begun in recent years. The challenge for the mainstream
projects, as for all hydropower projects in the Mekong River Basin, will be how to maximize the
benefits and minimize the losses.
If all mainstream projects proceed, Lao PDR is estimated to receive US $2.6 billion/year
or 70% of the export revenue generated by these dams, and Cambodia would receive US $1.2
billion/year or the remaining 30%. Neither the government nor the country as a whole would75
reap the benefits in either Lao PDR or Cambodia due to the bulk of the hydropower concessions
going to the developers and financiers of the projects; this will hold the same for export
revenues. For example, the Xayaburi dam, though being developed with high levels of state
involvement, is almost an entirely Thai project; Four major banks in Thailand provided the
capital to start construction, a Thai contracting company is running construction operations, and
Strategic Environmental Assessment of Mainstream Dams Final Report. Rep. Hanoi, Vietnam: n.p.,74
2010. Final Report. Mekong River Commission, Oct. 2010. Web. 24 Apr. 2014. <http://
www.mrcmekong.org/assets/Publications/Consultations/SEA-Hydropower/SEA-Main-Final-Report.pdf>.
See 7475
32

the Electricity Generating Authority of Thailand will be the off-taker for the power.
Regardless, the high levels of FDI to Lao PDR and Cambodia will approach US $25
billion if all of the projects go forward, which may spur intensified economic development in the
host countries and the Lower Mekong Basin region as a whole. To add, hydroelectricity76
development could help pull the estimated 15 million people in the region who do not have
electricity access out of energy poverty, further intensifying the potential economic growth
associated with the dam projects. As shown below in figure 5, just between Lao PDR and77
Cambodia, 10 million individuals lack access to electricity. Further, in Cambodia, the poorest78
of the four riparian states of the lower basin, around 23% of the population might have access to
electricity but cannot afford it.79
Country
Population
without electricity
millions
Electrification rate
%
Urban
electrification
rate
%
Rural
electrification
rate
%
Cambodia 9 34 97 18
Lao PDR 1 78 93 70
Thailand 1 99 100 99
Vietnam 4 96 100 94
See 7476
The International Energy Association part of the OECD, defines energy poverty in a two part fashion: first, one77
must have access to electricity, but also have access above the thresholds of 250 kWh per year for rural households
and above 500 kWh for urban families. Energy acts as a critical economic facilitator- every advanced economy has,
and will continue to, require reliable connections to modern energy sources to allow for its development and further
growth. In developing countries, access to secure and affordable energy services is crucial in reducing poverty,
promoting economic growth, and improving health.
"Energy Access Projections to 2030." World Energy Outlook. International Energy Association, 2014.78
Web. 24 Apr. 2014. <http://www.worldenergyoutlook.org/resources/energydevelopment/
energyaccessprojectionsto2030/>.
Bouapao, Lilao. "Livelihoods and Migration." The Water-food-energy Nexus in the Mekong Region:79
Assessing Development Strategies considering Cross-sectoral and Transboundary Impacts. Ed. Alex
Smajgl and John Ward. New York: Springer, 2013. N. pag. Print.
33
Figure 5: This table shows the population without electricity access, the overall electrification rate, and
the urban and the rural rates for the four riparian nations of the Lower Mekong Basin. Data extracted
from the International Energy Association’s database on world energy access.

Significant net negative impacts on the fisheries of the river will certainly be observed if
the hydropower projects go forward. If all are built, the losses directly due to the construction of
the mainstream dams are estimated to be worth US $476 million/year. This reduction of output
of the fisheries will be amplified by the loss of agricultural land valued around US $25.1 million/
year. The main trigger for these losses stem from the reduction and/or almost total elimination80
of the annual flood pulse caused by the increase in run off during the monsoon season, which
lasts from late May until October in the Mekong Region. Converting the Lower Mekong from a
free-flowing river to series of reservoirs will alter nutrient and sediment flows and riverbank
morphology negatively impacting agriculture; reduce the changes in flow levels between the wet
and dry seasons and in turn affecting the signaling mechanisms for fish to migrate to/from
spawning and feeding areas; and hinder the ability for fish species to travel up and downstream.81
Further, mitigation efforts will only partially alleviate the impacts of the dams- for both the
fisheries and the agriculture sector this goes with costs. Even the most conservative of82
estimates suggest the fall in the wild fish catch caused by main stem hydropower construction
will surpass the combined livestock production of Cambodia and Lao PDR. Fisheries created in
the reservoirs behind the dams at best could only compensate for 10% of the losses caused by the
dams. This will place not only the livelihood of tens of millions in jeopardy but also their food
security. Estimates state around 65 million people depend on the fish protein derived from the
Pech, Sokhem. "Water Sector Analysis." The Water-food-energy Nexus in the Mekong Region: Assessing80
New York: Springer, 2013. Print.
See 79, 8081
Strategic Environmental Assessment of Mainstream Dams Final Report. Rep. Hanoi, Vietnam: n.p.,82
2010. Final Report. Mekong River Commission, Oct. 2010. Web. 24 Apr. 2014. <http://
www.mrcmekong.org/assets/Publications/Consultations/SEA-Hydropower/SEA-Main-Final-Report.pdf>.
34

currently free-flowing Mekong River. The detrimental effects of any reduction in fish catch will
be especially felt hard by Cambodia, the poorest nation in the Lower Basin. At the same time83 84
as these potentially detrimental developments are under consideration, the demand for fish has
increased in the Lower Basin- especially in Thailand and Vietnam as well as just beginning to in
Lao PDR. However, fish catch sizes will drop with almost complete certainty if any dam on the
mainstream is completed.85
With the rise of Thailand’s and Vietnam’s economies as well as the development of
native environmental movements, have spurred the search for other sources of raw resources and
energy in the neighboring countries. In other words, with the outflow of timber, gems, and other
resources from surrounding countries into Thailand (and to a lesser degree Vietnam), a resource
periphery of sorts made up of Lao PDR and Cambodia has emerged. The renewed interest in
hydroelectricity development could be considered an aspect of this regional paradigm of resource
extraction. The energy produced, chiefly in Lao PDR due to its massive potential, will not be for
domestic consumption. In turn, as a result of this export-centric development strategy, many86
contend that little domestic development will stem from the development of hydroelectricity.
Following from this, there exists an inverse relationship between the costs of avoiding and/or
mitigating the environmental and social impacts in Lao PDR and Cambodia and the profits to be
Fullbrook, David. ”Food Security in the Wider Mekong Region." The Water-food-energy Nexus in the Mekong83
Region: Assessing Development Strategies considering Cross-sectoral and Transboundary Impacts. Ed. Alex Smajgl
and John Ward. New York: Springer, 2013. Print.
See 8284
See 8385
35

generated. The companies constructing the dams wish to minimize their costs to maximize their
return on investment and to do so, effectively ignore the negative ‘externalities’ which may occur
due to dam construction. However, the local population often is not prepared to deal with these
harmful social and environmental impacts that may arise. Further complicating the picture, the
benefits and impacts within each country will be not even, nor between the countries of the LMB
either.87
With the question of who may benefit in the LMB from greater development and how
will the construction of hydropower projects on the mainstream alter the dynamic, complex
interplays emerge. For example, in Cambodia, there is predicted to be a decrease in the GDP in
the short to medium term chiefly associated with the decrease in the fisheries as well as impacts
on food security. However, these losses in Cambodia may or may not be made up by the
increased development in the country due to a secure and more reliable power supply as well as
minimal increases in government revenues (note: the financial benefits LMB mainstream dam
development will likely flow to the developers involved, not the governments due the business
structures employed). The population of Lao PDR also faces potential income decreases from88
mainstream dam development chiefly due to decreases in the Mekong fishery productivity. The
2010 Basin Development Plan Programme from the MRC, estimates a 58% decrease in the fish
capture yields from the baseline if all dams are built. By 2030, due to a combination of the89
decline in the fish yields and population growth, the proportion of fishing households would
see 7887
see 7988
Bouapao, Lilao. "Livelihoods and Migration." The Water-food-energy Nexus in the Mekong Region: Assessing89
New York: Springer, 2013. N. pag. Print.
36

decline. For example, when examining the effects of the Pak Mun dam, one of the largest
hydropower developments on a tributary of the Mekong, a 50-100% decrease in the fish yields
resulted in a drop of fishing households in areas upstream of the dam by 66.7% to 95.6%.
Reductions in fish yields and riverbank gardens as well as inundated agricultural lands, will spur
greater migration from rural to urban areas and from Cambodia and Lao PDR to Thailand.
Further compounding the issue, a very small percentage of the local population in Lao PDR and
Cambodia, where the sites of the purposed dams in the LMB are located, are qualified for the
construction jobs; rather, the bulk of the dam construction teams will come from other countries,
chiefly Chinese construction contractors.90
Lao PDR: Battery of the Lower Mekong Region
Based on data from the International Monetary Fund, the World Bank, and the Central
Intelligence Agency, Lao PDR ranks as one of the poorest countries in the world. (For91 92 93
example, the CIA in 2013, ranked Lao PDR 147th out of 192 countries by per capita GDP; Lao
PDR only had an estimated per capita GDP of Int $3,100 in 2013). This could be partly94 95
explained by the lack of access to electricity in rural locations in Lao PDR (see figure 3). As of
See 8290
"GDP per Capita, PPP (current International $)." GDP per Capita, PPP (current International $). The World Bank,91
n.d. Web. 27 Mar. 2015.
"Country Comparison :: GDP - per Capita (PPP)." Central Intelligence Agency. Central Intelligence Agency, n.d.92
Web. 27 Mar. 2015.
"Report for Selected Countries and Subjects." Report for Selected Countries and Subjects. International Monetary93
Fund, n.d. Web. 27 Mar. 2015.
Note Int $ stands for international dollars; thus the GDP is much lower in US Dollars; latest estimates place it94
around US$ 700
See 8695
37

2008 per the government of Laos, the electrification ratio of the rural population was 63.4%.96
Even with the most current IEA statistics showing 70% of the rural population having access to
electricity, this still leaves 30% of the population in energy poverty .97
Lao PDR still today is considered as a least developed country with poverty rates
hovering around 28%. Like their neighboring riparian states in the LMB, the incidence of98
poverty is 1.5 times higher in the remote, hard to access upland communities and lower when
found closer to lowland areas of Lao PDR. Further, around 60% of the population is still rural,
compounding this uneven occurrence of poverty. To add, other metrics yield a more complete99
picture of the lack of economic development in the country. As of 2006, only 60% of the
population had access to clean drinking water and per 1000 live births, the infant mortality rate
was 59; the literate adult population comprised only 73% of the adult population per data
collected in 2007.100
With large swaths of the population lacking access to dependable electricity (see figure
5), living in abject poverty, and lacking access to engines of economic development, the single-
party Marxist regime of Lao PDR has set ambitious goals in attempts to change the status quo.
In charge of the country from 1996-2001, the Sixth Party Congress decreed as a national
Lao PDR. 2010. Rural Electrification Master Plan (REMP). Ministry of Energy and Mines: Vientiane, Lao PDR96
See 7797
"About Lao PDR." About Lao PDR. United Nations Development Programme, 2013. Web. 05 Apr. 2015.98
See 15, See 2799
See 79100
38

development goal to exit the group of least developed countries by 2020. To achieve this101 102
benchmark, the government has turned to increasing the investment level dramatically, especially
foreign direct investment (FDI). The National Poverty Eradication Programme, set forth by the
Seventh Party Congress, hold FDI allows for the financing of growth generating instruments,
like hydropower, and consequently, “…by expanding the national taxable resource base through
the creation of wealth as a result of market-oriented, taxable transformation of the national
resources.” The development of large-scale hydroelectricity and mining projects are considered
one of the few options for attracting such investments, gaining export income, and thereby
serving to ameliorate the current situation. Development thus far of hydropower potential in103
Lao PDR has helped lower the poverty rate in the country from above 46% in 1992, before the
implementation of the National Poverty Eradication Programme, to around 28% in 2008.104
However, further exploitation of this resource, especially main-stem dams, could prove
precarious for the country; for this could not only the result in greater environmental
degradation, but also economic and social instability with the associated reductions in the fish
catch and resettling of millions who live along the banks of the Mekong.
An example of this instability is the potential for Lao PDR to become a rentier state. The
rentier state paradigm, while typically associated with oil-exporting nations, with the continued
Virtanen, Maarit. "Foreign Direct Investment and Hydropower in Lao PDR: The Theun-Hinboun Hydropower101
Project." Corporate Social Responsibility and Environmental Management 13.4 (2006): 183-93. Web. 27 Mar. 2015.
Least developed countries are characterized by low gross national incomes, weak human assets, and high102
degrees of economic instability.
Lao PDR. 2003. National Poverty Eradication Programme (NPEP), Eighth Round Table Meeting, Vientiane,103
Lao PDR, 2003.
See 92104
39

development of hydropower resources, Lao PDR could become such a nation. At its core, the
rentier state concept centers around who or what supports the state. In nations with diversified
economies, the support for the state comes from the populace and to pay for itself fashions a
system to extract surpluses from society (e.g. taxation mechanisms); in rentier states, the state is
paid for by rents accrued from the rest of the world, and supports society via allocations of this
rent. In other words, the government of such a state becomes financially independent of the105
people, decreasing accountability and greater democratic reforms (note: Lao PDR holds
elections, but only candidates from the Lao People’s Revolutionary Party are allowed to run for
office ). To evolve into a fully formed rentier state, the state should directly collect the rent. In106
Lao, hydropower developments fall into two groups: domestic and export projects. Electricité du
Laos (EdL) builds, operates, and controls most domestic projects; developments for export are
principally enacted by independent power producer (IPP) groups, and are larger in generating
capacity. Regardless, IPPs require state approval, giving additional power and cash flows as well
as less incentive for transparency to the Ministry of Energy and Mines. Raising the potential107
even further for Lao PDR to develop into a rentier state, Chapter 2 of the National Growth and
Poverty Eradication Strategy explicitly states, “…Royalties and taxes to the Government will
comprise the bulk of these revenues…” from the concessions given to build the hydroelectricity
Luciani, Giacomo. 2009. Oil and the political economy in the international relations of the middle east. Middle105
East Relations- Oxford University Press 2 : 82.
See 105106
See 101107
40

projects. This could cause larger economic imbalances, especially after the handover of108 109
dams financed by foreign governments and private-public partnerships. P3 or private-public
partnerships to support hydropower development in the LMB have the potential to support
economic growth and diversification via reinvestments of the income generated by electricity
exports. That stated, the SEA Report issued by the MRC, noted the bulk of the financial benefits
will flow to the developers involved in the projects as well as the lack of sufficient governmental
programs to successfully share the financial benefits from the dams to the communities affected
by development.110
In Lao PDR, the overall economic benefits of the dams will most certainly be unevenly
distributed and local and/or vulnerable populations will likely be affected by significant negative
impacts. Further, some of the benefits associated with hydropower development will not be seen
by Lao PDR until the after projects are transferred to government ownership, if a development is
constructed under a Build-Own-Operate-Transfer (BOOT) regime. The BOOT structure of111
partnership between the government and the private sector is an option for development of large-
scale infrastructure projects, especially in developing nations. Under this arrangement, the
government makes a concession agreement with a group to build, own, and operate the facility
for a predetermined length of time. Once this period ends, the government receives the
Released in 2004, the National Growth and Poverty Eradication Strategy succeeded the National Poverty108
Eradication Programme; see Data for more information.
Chapter 2, National Growth and Poverty Eradication Strategy (NGPES). Vientiane: Lao People's Democratic109
Republic, 2004. Print.
Strategic Environmental Assessment of Mainstream Dams Final Report. Rep. Hanoi, Vietnam: n.p., 2010. Final110
Report. Mekong River Commission, Oct. 2010. Web. 24 Apr. 2014. <http://www.mrcmekong.org/assets/
Publications/Consultations/SEA-Hydropower/SEA-Main-Final-Report.pdf>.
See 69111
41

ownership and rights of operation free of charge. Hydropower developments for energy exports,
such as the Xayaburi Dam, are organized under BOOT schemes in Lao PDR. Regardless of112
the mechanism, the overarching goals of the Government of Lao via its power sector policy are
to “…expand…sustainable electricity supply within the country…and to promote power
generation for export to provide revenus to meet…development objectives…” which have put
into motion developments such as the Xayaburi Dam, the first project on the main stem of the
Mekong in the LMB.113
Xayaburi Dam
As the first of the eleven proposed dams on the mainstream in the Lower Mekong Basin
countries, the Xayaburi dam holds a particular significance. The decisions surrounding its
construction and development will set the tone for future projects on the Mekong River main
stem below Yunnan Province in China. Currently in the first stages of construction, the
hydroelectricity dam is located roughly 30 kilometers east of Xayaboury, the capital of
Sainyabuli Province in Northern Lao PDR. With total construction costs at around US $3.5114
billion (114 billion Thai Baht) and a planned nameplate capacity in excess of 1,285 megawatts of
electricity, the Xayaburi project represents both a massive opportunity, but also could result in
irreversible adverse affects. Backers of the dam contend the development of the Xayaburi site
will encourage economic diversification and growth, and the income from the electricity exports
See 101112
Lao PDR. 2001. Power Sector Policy Statement. Ministry of Industry and Handicrafts, Electricity Department:113
Vientiane, Lao PDR.
"Xayaburi Dam." Xayaburi Dam. International Rivers, 2014. Web. 10 Apr. 2015.114
42

will create alternative livelihoods and employment for those affected via reinvestment.115
Regardless, as echoed in the Strategic Environmental Report commissioned by the MRC
Secretariat, the potential adverse impacts from the dam’s construction include low rates of
reinvestment of dam revenues, steep drops in the fish catch, reversals of poverty reduction, and
increases in inequality.116
Per the current power purchase agreement (PPA), the Electricity Generating Authority of
Thailand- the state owned enterprise which manages the majority of Thailand’s generating
capacity as well as the country’s transmission system- has agreed to purchased nearly 95% of the
electricity generated, with the remaining power going to domestic usage. To add, the117
financing of the Xayaburi dam has come from Thailand’s four largest banks and the construction
efforts are being managed by a major Thai development group; the World Bank Group and the
Asian Development Bank declined to provide funding due to large social and environmental
risks noted in the Strategic Environmental Assessment Report (SEA Report). This runs counter
to earlier positions head by both the World Bank and the Asian Development Bank as both lent
technical and financial support to other damn projects in Lao PDR, such as the Nam Theun 2
development. While foreign direct financial support to the Xayaburi dam has been limited to118
Thai groups, the World Bank Group has funded the construction of transmission lines in Lao
King, Daniel. "Regulating Social and Environmental Risk in ASEAN: The Xayaburi Dam Project in Lao PDR115
and Thai Banks." Ed. Cynthia Morel. Business and Human Rights in Southeast Asia: Risk and Regulatory Turn. Ed.
Mahdev Mohan. London: Routledge, 2015. 99-120. Print.
See 113116
Mekong River Commission. 2010. Summary of the Final Report: Strategic Environmental Assessment of117
Hydropower on the Mekong Mainstream. Hanoi, Vietnam. Mekong River Commission
See 113118
43

PDR.119
Outside of lending financial backing, two key foreign groups have been brought on for
environmental management and consulting hired by the Government of Lao PDR: Pöyry
Management Consultants from Finland for the initial compliance review and Compagnie
Nationale du Rhone based in France to review Pöyry’s work. Although the main environmental
consultant, many other groups- in particular the Compagnie Nationale du Rhone- have found
fault with Pöyry’s analysis and conclusions regarding the design of the Xayaburi project per its
2011 iteration, little effort has been take to mitigate the flaws raised. Concerns about not just120
the Xayaburi development but all mainstream dams stem from the damning SEA Report released
in 2010, which the Mekong River Commission Secretariat (MCRS) (See figure 2 in Background)
commissioned. The report chiefly recommended that decisions on Lower Mekong Basin
mainstream dams should be deferred for a minimum of ten years to allow for further impact
studies to be conducted, for other options to be discussed, and for reviews to be coordinated
every three years to ensure the quality of these studies.121
The main concerns surrounding the Xayaburi dam can be broken down into two main
areas: 1.) fish migration on the mainstream and 2.) the lack of trans-boundary considerations.
First, fish passes have only have had limited success for the up and downstream migration of
select species (e.g. salmon in the Pacific Northwest of North America). This is compounded by
lack of testing at scale for the fish-ladder technology needed to effectively handle the high
Chavapricha, Rome. "Projects & Operations." GMS Power Trade (Laos) Project. World Bank, 2015. Web. 08119
Apr. 2015.
Pöyry Energy AG, “Xayaburi Hydroelectric Power Project, Run-of-River Plant,” Commissioned by the120
Government of Lao PDR. 2011.
See 115121
44

biodiversity and large biomass of the long-distance fish migrations in the Mekong. A MRC122
appointed panel of seventeen international fishery and fish pass experts noted that no dam the
size of Xayaburi has had a successful fish pass built for it. The panel also added that no matter
what form they take, fish passes will not realistically mitigate the impact these developments on
the mainstream will have on main stem fish migrations. The second main issue stems from123
the lack of trans-boundary impact assessments and conversations about the dam’s affects. While
the financial structure of the deal is international, the impact studies have not been conducted
with the acknowledgment of Xayaburi’s cross-border effects. Though modifications have been
made to the dam design, such as including a modified fish passage, these two central anxieties
still remain.124
Despite its controversial nature, construction of the Xayaburi dam began preliminary
construction activities in 2010, with full ground breaking occurring 2012; currently, construction
is nearing the halfway mark. As will be discussed later, complicating the picture further, the125
power purchase agreement (PPA) signed between EGAT and the Xayaburi Power Company, Ltd.
and its approval by the Thai National Energy Policy Council and the Thai Cabinet is currently
under investigation by three separate Thai governmental bodies in regards to its compliance with
Thai law as well as its constitutionality as the developers did not include full impact assessments
5609-614. Web.
Dugan, Patrick. "Mainstream Dams as Barriers to Fish Migration: International Learning and Implications for123
the Mekong." Catch and Culture 14.3 (2008): 9-15. Web.
POLKUAMDEE, NUNTAWUN. "Fish Fix Adds B10bn to Xayaburi Cost." Bangkok Post. Bangkok Post, 3 Feb. 2015. Web.124
30 Mar. 2015.
"Xayaburi Dam." Xayaburi Dam. International Rivers, 2014. Web. 10 Apr. 2015.125
45

or public consultations. The groups investigating the PPA consist of: 1.) two investigations by
Senate Commissions; 2.) an investigation by the National Human Rights Commission; and 3.)
the Administrative Court of Thailand. If any these investigations result in the cancelation of126
the PPA between the EGAT and the Xayaburi Power Company, Ltd., the future construction of
the project could be called into question, as the financial structuring would fall apart.
Question
Herein lies the crux of this thesis: will the construction of Xayaburi project finish even if
the Power Purchase Agreement between the Xayaburi Power Company Ltd. and EGAT for the
purchase of 95% of the electricity per year is canceled, leaving the dam with the chance of not
having a primary off-taker for the electricity generated? To answer this question, this thesis127
will examine and weigh following factors: 1.) development goals of the Government of Lao
PDR; 2.) the historical inertia of the Mekong Project; 3.) the foreign financial flows surrounding
the project, 4.) the ongoing Thai investigations and court case; 5.) the mounting pressure from
civil society; and 6.) ability (or inability) of the Mekong River Commission to impact decision
making on hydropower developments. While no definite answer maybe reached about the future
of the Xayaburi dam, by illuminating the linkages between these factors, the discourse on further
dam development on the Mekong mainstream will hopefully become more refined. Specifically,
the relationships between domestic and trans-boundary motivations and their impacts for any
additional hydropower projects on the main stem river in the Lower Mekong Basin.  
See 113126
Note: Off-taker in electricity project development refers to the entity purchasing the power for use.127
46

Methods
To answer the question of whether or not the Xayaburi Dam will be completed even if the
power purchase agreement between the Xayaburi Power Company, Ltd. and the Electricity
Generating Authority of Thailand is canceled due to the ongoing investigations, a new
framework will be developed. This analytic framework incorporates elements from institutional
theory and business-case analysis as well as academic literature weighing the pros and cons of
development of hydroelectricity on the mainstream of the Mekong. The links between
institutional theory and business-case analysis methods in the context of large infrastructure
projects, while not always fully explained, are readily apparent in the case of the Xayaburi Dam.
To illuminate and explain these links, the key data for this model come from the official
contracts, letters of intent between the interested business parties, commissioned reports (both by
institutions and business groups), and other financial documents. Further, not only does there
exist a specific international governmental organization (IGO) for the Mekong’s hydropower
resources management, the Mekong River Commission, but also other institutions with large
interests in the same resources, such as the Government of Lao PDR, International Rivers, and
the World Bank Group, each with specific development and/or economic goals. Each institution,
involved in the Lower Mekong Basin, and their competing interests impact the business-case
analysis for the Xayaburi project, which in turn affects the subsequent decisions made by each
institution.
Institutional Theory
With several major governmental, international government bodies, NGOs, and other
institutional actors, each with varying objectives and each have contributed to the decision
47

making process to build or not to build the Xayaburi Dam, the concept of institutional theory
becomes extremely relevant in analyzing the actors decision making. Despite the multitude of
ways to explain the logic behind institutional theory, it remains critical to this thesis as each actor
who contributes to decisions about the Xayaburi project functions as an institution.
To understand institutional theory and its various subsets, a definition of an institution
must be established. While various definitions of what is a political or economic institution
exist, most share that the core feature of an institution is that they represent in one way or
another a structural element of society and/or policy. Further, these economic organizations128
and institutions can be explained as structures, which emerge and evolve into a specific form
because they work to solve collective actions problems and facilitate gains from trade. These129
structures can take the forms of formal, established bodies, such as the Mekong River
Commission, or could be informal relations, such as the interactions between the MRC, the
Government of Lao PDR, and the World Bank Group. Despite if the institution takes the form of
an official body or a set of interactions, it must have some measure of stability through time and
simultaneously affect individual behavior. Further, some notion of common values and meaning
should exist amongst the members of the institution.130
With the concept of an institution clearly defined, the idea of institutional theory can be
explored. Simply stated, institutional theory forms an approach to comprehend organizations
Peters, B. Guy. Institutional Theory in Political Science:3rd Revised: Edition. New York: Continuum128
Corporation, 2011. Print.
Moe, T. M. "Political Institutions: The Neglected Side of the Story." Journal of Law, Economics, and129
Organization 6.Special (1990): 213-53. Web. 12 Mar. 2015.
See 128130
48

and management practices as the product of social factors rather than economic realities.131
While social rather than economic influences might guide an institution, this does not preclude
economic reasoning for their foundation. Merely, actors within a given organization utilize their
institutional knowledge of roles, norms, procedures, and relationships to shape and categorize
their actions and interactions, both externally and internally. That stated, these actors typically132
abide by the rules set forth within the organization (e.g. in the 1995 Mekong Agreement
establishing the Mekong River Commission) or institutional norms which evolve over time. By
using these rules, institutions can endorse, condemn, and/or permit behavior taken by members
or outside groups. Or as Douglas North described institutions as, “…the rules of the game of
society or…humanly devised constraints…” that mold human interactions. With rules and133 134
norms based approach to institutional theory predicates, these factors determine who and what
comprise the different forms of decision making, how to handle and arrange information, and
what final action to take.135
Institutions, however, can fall victim to their own rules and norms in making decisions
over time as them become entrenched. While simple, the concept centers around the policy
choices made at the establishment of an institution, or the initiation of a policy, will have a
Kessler, Eric H., ed. "Institutional Theory." Encyclopedia of Management Theory. Vol. 1. Los Angeles: Sage,131
2013. 379-83. Print.
"Actors, Paradigms, and Institutional Dynamics." Advancing Socio-economics: An Institutionalist Perspective.132
Ed. J. Rogers Hollingsworth and Ellen Jane. Hollingsworth. Comp. Karl H. Müller. Lanham: Rowman & Littlefield,
2002. 109-46. Print.
Douglas North is an economist at UC Berkley known for his work in applying economic theory and quantitative133
methods to explain institutional change.
North, Douglass C. Institutions, Institutional Change, and Economic Performance. Cambridge: Cambridge UP,134
1990. Print.
On Institutional Embeddedness.” Advancing Socio-economics: An Institutionalist Perspective. Ed. J. Rogers135
Hollingsworth and Ellen Jane. Hollingsworth. Comp. Karl H. Müller. Lanham: Rowman & Littlefield, 2002. 87-107.
Print.
49

lasting influence over policy into the future. Termed path dependency, the core of this argument
within institutional theory describes that when a government program or organization begins
down a path there develops inertia around the original policy choices allowing them to persist.
To alter this course, if at all possible, usually requires a great deal of political pressure to result in
change. In other words, the outsized projection of institutional inertia exerts a powerful136
influence upon present and future possibilities for an organization. This also requires to account
for the social-economic environment in which these networks and institutions emerged.137
Both path dependency and rules-based institutional theory apply to several institutional
actors involved in the many decisions around the Xayaburi project. The Mekong River
Commission demonstrates the concept of rules determining who is brought to the table in
deciding the future of the hydropower resources of the mainstream Mekong. On the other hand,
the Government of Lao PDR has fallen victim to path dependency as well as the Thai financial
backers of the dam and the World Bank Group.
Business-Case Analysis
To better understand not only the institutional inertia which lead to the beginnings of the
development of the Xayaburi project, but also the history of the dam and the financial logic
behind it, a business-case analysis methods will be employed. This style of examination will
further illuminate the trans-border impacts, the foreign financial flows, and the inter-institutional
linkages surrounding the hydropower development. Further, a comprehensive, outside
See 128136
”Institutional Pathways, Networks, and Differentiation.” Advancing Socio-economics: An Institutionalist137
Perspective. Ed. J. Rogers Hollingsworth and Ellen Jane. Hollingsworth. Comp. Karl H. Müller. Lanham: Rowman
& Littlefield, 2002. 381-398. Print.
50

investigation of the Xayaburi Dam utilizing some business case techniques and considering
external factors has not been fully undertaken.
Business-case studies fall within the larger spectrum of the use of case studies as a
specific research strategy; albeit they include defining characteristics such as contracts (e.g. a
power purchase agreement), who are the financial backers of an investment, etc. The root idea of
case based research rests with its ability to produce a multi-sided view of a situation in its
context; this allows for the study of outside factors and process elements in the same real-world
setting. To add, case studies provide deep understanding and clarity for a specific phenomenon,
instead of mathematical models. Within organizational and management research, an138 139
organizational case study acts as an intensive examination of a single case comprised of
individuals, groups, and social structures in the confines of an organization. This mode of140
empirical inquiry becomes especially useful when lines between the subject matter and its
context are not clearly identifiable and in which several sources of evidence are employed. In141
the case of the Xayaburi Dam this holds true on multiple accounts; the influence of the
Government of Lao PDR, the external financing, state-owned businesses, etc. blurring the lines
between the project itself and the organizational environment around it.
A plethora of business case studies exist discussing large-scale infrastructure investments
around the globe. The Harvard Business School case study on the development of the Dubhol
Power Project in Maharashtra, India serves as a clear example of how to go about analyzing a
Halinen, Aino, and Jan-Åke Törnroos. "Using Case Methods in the Study of Contemporary Business Networks."138
Journal of Business Research 58.9 (2005): 1285-297. Web. 3 Mar. 2015.
The area of organizational and management research also studies institutional theory.139
Lee, A. S. "Case Studies as Natural Experiments." Human Relations 42.2 (1989): 117-37. Web. 10 Mar. 2015.140
Yin, Robert K. Case Study Research: Design and Methods. Los Angeles: SAGE Publications, 2009. Print.141
51

major development undertaking in the context of foreign direct investment, state interference,
and electricity generation. After providing background about state of the electric grid in India,
and speciﬁcally in state of Maharashtra; the Enron corporation and its development ventures; and
reforms in the power sector; the case uses a narrative framework starting with the origins of the
deal and the and ending with its tentative closure. While narrative structure will not be142 143
employed in the analysis of this thesis, such elements will be used as they give insight into the
connections between the various actors in the development of the Xayaburi Dam.
Palepu, Krishna G. and V. Kasturi Rangan. Enron Development Corporation: The Dabhol Power Project in142
Maharashtra, India. Case Study. Boston. Harvard Business Publishing, 1998.
Note: Used with permission of Professor Theodore H. Moran, Director of the Landegger Program in International143
Business Diplomacy at Georgetown University.
52

Framework
In order to understand in depth the case study of the Xayaburi project and to answer the
question will the construction of the Xayaburi Dam be completed in the face of uncertainty about
having a primary off-taker for the electricity generated onsite, a new framework has been
developed. As discussed above in methods, it relies on concepts from institutional theory as144
well as business-case analysis and academic and primary source literature to explore the tensions
and uncertainty surrounding the ultimate outcome of this development.
A total of six factors will be organized into four buckets (see figure 6 on the following
page) to better understand them separately and how they operate in context with one another;
elements of some of the factors will be found in two buckets. The four buckets are: A.) The
Approval, Financing, and Investment of the Xayaburi Dam; B.) The Mekong River Commission;
C.) Foreign Direct Investment in the Utility Sector in Lao PDR; and D.) The Thai Government
Investigations and Challenge in Administrative Court. The factors and their corresponding
buckets follow: 1.) The development goals of the Government of Lao PDR (Buckets A and C);
2.) The historical inertia or path dependency of the Mekong Project (Bucket B); 3.) The foreign
financial flows surrounding the Xayaburi Dam (Buckets A and C); 4.) The ongoing Thai
government investigations and court case (Bucket D); 5.) The mounting pressure from civil
society (Bucket C and D); and 6.) The ability (or inability) of the Mekong River Commission to
impact decision making on hydropower developments (Bucket C). As seen in the legend, the
color of the link between the buckets corresponds to whether the association is political,
political-economic, or a financial.
Note: Off-taker in electricity project development refers to the entity purchasing the power for use.144
53

54
A
B
C
D
Figure 6: The below diagram outlines the framework that this thesis will utilize in an attempt to
answer the question of whether the Xayaburi Dam will be completed even if it does not have a
primary off-taker. The 6 factors discussed at the end of the Challenges chapter and above are
organized into the Buckets A-D. The numbered linkages are brieﬂy deﬁned below.
Legend
— Financial Linkages
— Political Linkages
— Political-Economic Linkages

Linkages
(Note: the number of the linkage refers to figure 6 above and the color refers to the nature of the
linkage- political, financial, or political-economic)
1.) The political relationship, albeit an ineffective one, between the Mekong River Commission
(MRC) recommendations on dam development and the Government of Lao PDR (GOL)
approving the start of construction on the Xayaburi Dam.
2.) The GOL approving the construction of the Xayaburi Dam over issues raised by the MRC,
shows the power dynamic at play in the Lower Mekong Basin (LMB). Further, the transborder
nature of the financing of the dam contributed to this interplay.
3.) The utility sector in the past ten to fifteen years in Lao PDR has seen a massive influx of
foreign direct investment (FDI), opening the door to further development of previously infeasible
projects.
4.) The FDI into the country for infrastructure development was not only encouraged by the GOL
but also affected their decision making about the Xayaburi Dam. Further, the Xayaburi Dam
could create a feedback loop.
5.) The FDI into Lao PDR’s utility sector has spurred the MRC to activate and enforce
mechanisms over the development of the hydropower resources of the LMB not used since the
1995 Mekong Agreement.
6.) and 7.) The ongoing Thai government investigations and the challenge in Thailand’s
administrative court into the approval of the power purchase agreement between the Electricity
Generating Authority of Thailand and the Xayaburi Power Company Ltd. could alter the both the
55

ﬁnancial calculus supporting the construction of the Xayaburi Dam and current as well as future
FDI ﬂows into Lao PDR.
8.) The potential political effects the current investigations and court challenge in Thailand and
their eventual rulings could have on how and what decisions the MRC will make about
hydroelectricity development in the LMB and the Xayaburi Dam. The relationship also works
the other direction; the MRC could potentially indirectly shape the nature of investigations and/
or court case.
56

Data
Outside of the academic literature to discuss the potential economic losses and/or gains
from hydroelectricity development, the bulk of the data set is compromised of original, primary
sourced documents reached through public-access methods. One of the chief sources, which an
excerpt of is found below (see figure 2), is the Power Purchase Agreement (PPA), or the contract,
signed between the Electricity Generating Authority of Thailand (EGAT), the Xayaburi Power
Company Ltd., and Lao PDR to buy 95% of the power produced by the dam. Other primary145
source documents include the 2011 Compliance Report produced by Pöyry Energy AG under
commission by the Government of Lao PDR (GOL); Comments by the GOL on the Mekong
River Commission Secretariat (MRCS) technical review of the proposal for the Xayaburi Dam
Project; the National Growth and Poverty Eradication Strategy put forth by the GOL in 2004;
and the Implementation Status Reports of the Greater Mekong Subregion (GMS) Power Trade
Project in Lao PDR funded by the World Bank. To compliment these primary source documents,
additional white and grey literature on the financing of the Xayaburi Project will be utilized; for
example, the Mekong Energy and Ecology Network, a research group promoting sustainable
power development in the GMS, released a report tracing the capital flows into Lao PDR for the
construction of the dam. In the following pages are three representative selections of the larger
information set found in the supporting materials appendix at the end of this thesis. (See
supporting materials for larger excerpts of the PPA, the National Growth and Poverty Eradication
Strategy, the Implementation Status Reports of the GMS Lao PDR Project, etc.)
Chapters 4 and 5, Xayaburi Dam Power Purchase Agreement between Lao PDR, EGAT, and the Xayaburi Power145
Company Ltd., 2010. Accessed via LaoFab.
57

58
Figure 7: Selected Passages from the PPA between the Xayaburi Power
Company, Ltd., the EGAT, and Lao PDR. Section A shows the rate
schedule per kWh for various operational scenarios; Section B shows the
amount of annual power targeted for purchase by EGAT.
Section B; The annual
purchase targets by EGAT
from the Xayaburi Power
Company Ltd.
Section A: Rate Schedule for
electricity purchase by EGAT

Figure 7 above shows two, very short excerpts from the nearly 1000-page total PPA
between the EGAT, the Xayaburi Power Company, Ltd. and Lao PDR. Section A, comes from
the Schedule 2 section of the document, which establishes the rate regime for the different
categories of energy EGAT will purchase from the Xayaburi Power Company, Ltd. once the dam
is operational. The three tiers of energy- primary, secondary, and excess- refer to both the
quantity of electricity the EGAT will demand at any given point as well as the amount of
electricity generated by the Xayaburi Dam. This tier breakdown is a common contractual146
structure employed in negotiating PPAs to ensure not only the off-taker will have a minimal
amount of electricity at all specified, but also to protect the generator from fluctuations in
production due to factors such as maintenance and unforeseen downtime (e.g. storms, equipment
failure, etc.). Section B, establishes the quantity of electricity targeted for supply per annum,147
barring any Force Majeure which affects either the EGAT or the Xayaburi Power Company,
Ltd. These two short excerpts along with the rest of the body of the PPA establish the148 149
precedent of an annual return rate close to US $462 million for the Xayaburi Power Company
Ltd. and EGAT as the off-taker of nearly 95% of the electricity generated.
The following passage comes from the National Growth and Poverty Eradication
Strategy (NGPES) of 2004 from the Government of Lao PDR, highlighting the state’s focus on
Xayaburi Dam Power Purchase Agreement between Lao PDR, EGAT, and the Xayaburi Power Company Ltd.,146
2010. Accessed via LaoFab.
Author’s knowledge gained from over a year of experience working at Hunt Alternative Energy, a developer of147
distributed generation facilities in North America. Brian Dunn, third reader and advisor to this thesis, is the current
VP of Hunt Alternative Energy.
Force Majeure is defined by the PPA… “an event, condition or circumstance or combination of events, conditions148
and circumstances beyond the reasonable control and arising without the fault or negligence of the Party claiming
Force Majeure (the Affected Party)…” in Section 11. 1 (a)
See 144149
59

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