International Finance Corporation (IFC), a member of the World Bank Group, and Lao People’s Democratic Republic’s Ministry of Energy and Mines (MEM) signed an agreement on September 5th to advance environmental and social sustainability in the country’s hydropower sector.
Building on five years of collaboration, the new agreement will launch Lao PDR’s first cumulative impact assessment in the Sekong River Basin – an important trans-boundary river system of the Mekong River shared with Cambodia and Vietnam. Located in southern Lao PDR, the Sekong River Basin is facing rapid development planning with large hydropower projects and wind developments and is anticipated to impact downstream river systems. This is the first of several activities conducted under the partnership to support sustainable private sector investment.
“We are encouraging new developments in the energy sector that support Lao PDR’s socio-economic development,” said Dr Daovong Phonekeo, Director General of the Cabinet, Ministry of Energy and Mines, Lao PDR. “Lao PDR’s 2030 power vision focuses on the development of all potential renewable resources based on competitiveness, sustainability and efficiency,” he said. “We are also working on promoting power connectivity throughout the region, so understanding cumulative impacts of projects is an essential step to achieving our vision.”
Over the past 40 years, Lao PDR has aimed to achieve a self-sufficient power sector. Abundant in water resources, the government has focused most of its energy development on hydropower to reach the country’s estimated potential of about 26,000 MW – one of the region’s highest. Today, nearly 94 percent of households have access to electricity through rapid rural grid expansions and off-grid electrification schemes. The government’s current focus is to export electricity to its neighbors to fuel domestic economic growth whist identifying other renewable energy options.
“Shifting private sector perceptions from their individual project risks to cumulative or basin-wide impacts of development will help push Lao PDR’s environmental and social sustainability agenda forward,” said Kyle Kelhofer, IFC Country Manager for Lao PDR, Cambodia and Vietnam.
Supported by the Australian government, IFC has been working to advance environmental and social sustainability in Lao PDR’s hydropower sector since 2012. Since then IFC has contributed to several policy and guidelines for the hydropower sector including the recent Water and Water Resources Law and the Policy on Sustainable Hydropower Development. In 2014, IFC established Lao PDR’s Hydropower Developers’ Working Group to help the private sector drive sustainability and overcome challenges in their sector. The working group has since been replicated in Myanmar and Pakistan and has encouraged companies to learn the benefits of raising environmental and social standards, share information and address sector-wide issues together.
“Our partnership with IFC is unique as it closely engages the private sector and will help strengthen our awareness of the business case for environmental and social sustainability when working with companies,” said Phonekeo.