IFC had an opportunity to interview John Williams, outgoing Ambassador to Lao PDR, on why Australia is working to help the Lao government advance its environmental and social standards in the hydropower sector. As Ambassador Williams explains, Australia is the only development partner in the Mekong region that engages all parties involved in water resources management including officials, researchers, private sector and communities.
IFC: What issues are at stake in Lao PDR that the Australian government wants to improve?
Ambassador Williams: The Mekong River is a vital resource for all five countries south of China and lower Mekong. It is a crucial source of irrigation for agriculture and fisheries. It is also a source of protein for tens of millions of people and communities from the lower Mekong countries. In addition, it is an important artery for trade, transport, and tourism in the region.
It is also an important source of hydroelectric power. Lao PDR is trying to develop as the battery of Asia — a developer of hydropower to export electricity to the region. It is a poor country with about 6.8 million people, and a large portion of the population lives below the poverty line.
Lao PDR may not have ample resources, but it does have abundant water resources. Australia, along with IFC, has been working with the government of Lao PDR to develop its hydropower capacities as sustainably as it can. What I think Australia’s main impact has been with IFC is helping the Lao government to increase expectations for its private sector developers.
IFC: Why do you think Australia is well-placed to assist Lao PDR and the Mekong Region on these pressing issues?
Ambassador Williams: From an Australian perspective, we are talking about working on important issues in a region and neighborhood that really matters to Australia. The stability and prosperity of countries in the lower Mekong region in Southeast Asia matter to us because of our proximity, the growing links between people in both our countries and regions, and because of the growing economic links between these countries. Having a stable, well-managed neighborhood is a real positive for Australia in terms of our own prosperity and regional connections.
IFC: When did you start working with IFC and how would you evaluate your positive development impacts?
Ambassador Williams: Australia is very proud of the partnership with IFC in water resources management since 2014. Our work with IFC has helped us strengthen understanding among private sector developers in the region on the importance of environmental and social impacts of their work and the need to maintain high standards for quality infrastructure around water.
Together, we have been strengthening regulation and private sector capacity to ensure companies are aware of international standards. I have to say, we would have pretty genuine concerns about the quality of some private sector projects in the Lao PDR. It is vital for this country to develop its hydro sector in a way that maximizes the value of its water resources, and also ensures long-term sustainability of its projects.
IFC: How has the Australian government engaged the private sector in Lao PDR?
Ambassador Williams: One particular area of work that stands out, that Australia has done with IFC in Lao PDR, is to develop a working group of hydropower developers – 20-25 companies helping the Lao PDR develop its hydro potential. It enables hydropower professionals to share their experiences on how to strengthen their approach to government relations. It also builds understanding among each of the companies on the importance of addressing environmental and social impacts and adhering to international standards for their projects in the Lao PDR. It has been a very successful endeavour that we would like to see replicated in other countries in the Lower Mekong Region.
IFC: Agriculture, fisheries and water are one of the six priority areas of investment for Australia’s aid program. What has the Australian government done so far to address these priorities?
Ambassador Williams: With IFC, Australia is very pleased to have completed a profile for the Nam Ou River Basin. The Nam Ou is a beautiful, extensive river system in the northern Lao PDR. The profile — completed with the IFC — gives Lao PDR a sense of all the different users of that water. It is a tool for Lao PDR to understand how to use that water among a range of different users including hydropower, water for irrigation, and tourism. It has promising potential for tourism and the Nam Ou, among others. It has been a significant and quality effort along with the IFC. It is something we hope will also work in other river basins in Lao PDR.
IFC experts have helped the Lao PDR draft the Water Law that was adopted by the Lao Parliament in Vientiane in May 2017. The law sets out the rights and obligations of water use in contemporary Lao PDR settings, taking into account rapid growth of projects, particularly hydropower. This has been significant for Lao PDR to have a legal framework to set out different allocations of water across its economy.
IFC: IFC, with the Australian government, has just started working in southern Lao PDR for the first time with the government and the private sector. Could you tell us a little about that?
Ambassador Williams: IFC, with our support, is also working on a cumulative impact assessment in the Sekong River Basin in southern Lao PDR, where the river crosses the borders of Cambodia and Vietnam. There are a number of planned hydropower projects in the Sekong River Basin, and what we are doing with IFC is helping the Lao government tweak its planning in the long-term to maximize the hydropower potential in that region, and to mitigate impacts on the river basin and the communities living within it.
Note to readers: Currently, IFC is working with the government of Lao PDR and hydropower companies to conduct the first basin-wide cumulative impact assessment for the renewable energies sector in the Sekong River Basin in the southern-most part of the country. Log on to ifc.org/hydroadvisory for updates on this initiative and other developments in Lao PDR’s hydropower sector.