Public Statement by Fair Finance Thailand: Responsibility of Financiers of the Xayaburi Hydropower Project

7 พฤศจิกายน 2562

The commercial sale of power produced by the Xayaburi Power XPCL’s Xayaburi Hydropower Project has begun since 29 October 2019 amidst sustaining opposition from civil society organizations in many countries and just a few months after the record low of water in the Mekong.[1]

Xayaburi HPP is the first of a series of dams planned in the lower reach of the Mekong Basin and the first dam that has triggered the Prior Consultation Process by the Mekong River Commission (MRC) signed by the four riparian countries including Thailand, Cambodia, Vietnam, and Lao. The Project has been questioned and subject to fierce opposition at different levels since its construction has begun including from the governments of Vietnam and Cambodia, the two downstream countries. International and domestic NGOs, communities along the Mekong, the governments of USA, Cambodia and Vietnam have been asking the company to postpone the construction for at least ten years pending more comprehensive public hearings among stakeholders by the MRC.[2]

The opposition and concern have all pointed to the prospect that this Xayaburi Dam will bring about massive “ecological disaster”. Independent studies have time and again highlighted how the Xayaburi HPP would create adverse and irreversible transboundary impacts including the fluctuation of water levels, sedimentation, and disruption of fish migration as well as impacts to be borne by over 60 million people whose livelihoods are dependent on the Mekong, directly and indirectly.[3]

Just for the fish migration, scientists have criticized how the fish passage technology adopted by the Project is derived from USA and Europe and will work with only 5-8 fish species including Salmon and Trout. The knowhow is not suitable to the Mekong which is home to more than 50 migratory fish species with high economic value. Until now, no technology exists to address the problems that will befall migratory fish in the Mekong.[4] Yet, the company wants to use Mekong as its laboratoryto test the unproven technology at the expense of the river ecology.[5]

The dubious fish passage technology asides, the project also lacks transparency in terms of the social and environmental impact assessment since its construction has begun. The company’s Environmental Impact Assessment (EIA) in 2010 only accounted for impacts in the area which was likely to be inundated by the dam and ten kilometers downstream.[6] No attempt has been made to assess transboundary impacts and the EIA has never been disclosed to stakeholders during the Prior Consultation Process, not to mention the public. This happened despite public disclosure of EIA and disclosure of expenses concerning the development of social and environmental mitigation measures are a prerequisite prescribed in the Lao government’s Policy on Sustainable Hydropower Development (PSHD) (2015) and the Guidelines (2016).[7] In addition, the company has never disclosed to the public information about fish species and the change of water level upstream and downstream. Such information is indispensable for an effective assessment of the fish passage technology and the possible impact on the communities along the Mekong and the impact on the river ecology. 

The prospect of such transboundary social and environmental impacts and the Project’s lack of transparency aforementioned has led to questions as to if the six banks that support the Project financially, all of which are from Thailand, have set out any guidelines to regulate their borrower or not. The five banks from Thailand, the Bangkok Bank, Kasikorn Bank, Krung Thai Bank, Siam Commercial Bank and TISCO are all signatories to the Sustainable Banking Guidelines: Responsible Lending since last August.[8] According to the Guidelines, the signatory banks are supposed to  engage with important stakeholders beyond regulators, shareholders, and clients to determine material Environmental, Social and Governance risks and to assess potential impacts associated with banks’ lending activities” and  engage with clients to proactively support them in reducing negative impacts and improving their sustainability performance.”. 

In addition, the two banks including the Siam Commercial Bank and the Kasikorn Bank have even adopted the United Nations Guiding Principles on Business and Human Rights (UNGP)[9] which set out measures to ensure resect in human rights throughout the supply chain and to call for effective grievance and remedy procedure.

 

Fair Finance Thailand (www.fairfinancethailand.org) and the undersigned organizations demand the following from the six Thai banks which lend money to the Xayaburi Power XPCL including the Bangkok Bank, Kasikorn Bank, Krung Thai Bank, Siam Commercial Bank, Export-Import Bank of Thailand (EXIM Bank) and TISCO.  

  1. Urge Xayaburi Power XPCL to disclose critical information to the public prior to the next drawdown as follows;
  • Information about the species and the number of fish that have successfully passed through the fish passage since April 2019 until present.
  • Information about the change of water level upstream and downstream since April 2019 until present, since the company has started to informally sell power to the Electricity Generating Authority of Thailand (EGAT) since April 2019.[10]
  • Information about grievance procedure and remedy for those affected by the Project.
  1. Adopt the United Nations Guiding Principles on Business and Human Rights (UNGP), and require the Xayaburi Power XPCL, as the bank’s borrower, to adopt the same set of principles.
  2. Set up grievance procedure to receive complaints from people who are affected by the Xayaburi HPP pursuant to the UNGP.
  3. Declare the commitment to not fund any hydropower development project in the Lower Mekong Mainstem (exclusion list) for at least ten years, as proposed by stakeholders during the MRC Prior Consultation Process.
  4. Adopt the Equator Principles, an international standard concerning loaning to large scale development projects

Fair Finance Thailand is hopeful and confident that the implementation to meet the five demands will not only help the banks to cope with the impending Environmental, Social, Governance Risks (ESG risks) from the Xayaburi HPP, but will also be a chance for the banks to show their social responsibility. It will signal a new era of “sustainable banking” as committed to by most of the banks.

Fair Finance Thailand  

7 November 2019 


About Fair Finance Thailand

Founded in 2018, members of Fair Finance Thailand coalition (FFT, website www.fairfinancethailand.org) include one research company and four CSOs — Sal Forest Co., Ltd., Foundation for Consumers, ENLAW Foundation, International Rivers and Ecological Alert and Recovery - Thailand (EARTH). FFT members have been monitoring impacts and sustainability challenges of Thai financial institutions, and aim to advocate genuine adoption of the concept and best practices of sustainable banking. FFT utilizes Fair Finance Guide International (www.fairfinanceguide.org) methodology in its annual assessment of disclosed policies of largest Thai financial institutions, starting in 2019.

Project Coordinator: Julnarong Wannakowit

Phone 091-884-3988

Email Julnarong_123@hotmail.com


Signatory organizations 

  1. The Mekong Butterfly
  2. Spirit in Education Movement (SEM)
  3. ETOs Watch Coalition
  4. Foundation for the Environment and Natural Resources (FENR)
  5. EarthRights International
  6. Hug Loei River Group
  7. Hug Chiang Khan Group
  8. Thailand River Network 
  9. Hug Mekong River Network
  10. Network of Community Councils in Seven Northeastern Provinces 
  11. The Thai Mekong People’s Network from Eight Provinces   
  12. Raks Chiang Khong Group
  13. River for Life Association
  14. Mekong Community Institute
  15. Hug Nam Khong Network, Ubonratchathani
  16. Foundation for Integration of water Management (Thailand)  
  17. Eco-Culture Study Group
  18. Raks Nam Oon Group
  19. Thailand Nature Explorer (siamensis.org)
  20. Satun Development Watch
  21. Network of People who Own Mineral Resources
  22. Raks Chumphin Network
  23. We Fair
  24. Public Policy on Mineral Resources Project (PPM)
  25. Green South Foundation
  26. Green World Foundation
  27. Community Resource Centre Foundation (CRC)
  28. Center for Protection and Revival of Local Community Rights (CPCR)
  29. Human Rights and the Environment Association (HREA)
  30. Dr. Chainarong Setthachua, lecturer of the Faculty of Humanities and Social Science, Maha Sarakham University
  31. Tara Buakamsri, Greenpeace Thailand
  32. Worawan Sukralerk, researcher and campaigner 

 Reference:

[1] Mekong River Commission (2019) Mekong water levels reach low record, Media Release, 18 July 2019 Accessed at: http://www.mrcmekong.org/news-and-events/news/mekong-water-levels-reach-low-record/

[2] Mekong River Commission (2011) Prior consultation project review report Volume 2: Stakeholder Consultations related to the proposed Xayaburi dam project Accessed at: http://www.mrcmekong.org/assets/Consultations/2010-Xayaburi/2011-03-24-Report-on-Stakeholder-Consultation-on-Xayaburi.pdf, p. 35.

[3] Herbertson (2012) The Xayaburi Dam: Threatening Food Security in the Mekong, 11 September 2012 Accessed at: https://www.internationalrivers.org/resources/the-xayaburi-dam-threatening-food-security-in-the-mekong-7675

[4] International Rivers (2011) Sidestepping Science: Review of the Pöyry Report on the Xayaburi Dam, November 2011, Accessed at: https://www.internationalrivers.org/sites/default/files/attached-files/intl_rivers_analysis_of_poyry_xayaburi_report_nov_2011.pdf, p. 4.

[5] International Centre for Environmental Management (2010) Strategic Environmental Assessment of Hydropower in the Mainstream, p. 24.

[6] Hirsch, P. (2011) Review of Xayaburi Dam EIA incorporation into regional consultation on impacts. Available at: https://www.internationalrivers.org/sites/default/files/attached-files/hirsch_xayabouri_dam_esia_consultation_process.pdf

[7] The Government of Lao PDR, Policy on Sustainable Hydropower Development in Lao PDR (PSHD), 2015; and 2016 Policy Guidelines for the Implementation of Policy on Sustainable Hydropower in Lao PDR (see 5.10 Information Disclosure, p. 13).

[8] Accessed at: https://www.tba.or.th/wp-content/uploads/2019/08/Guidelines-ResponsibleLending.pdf

[9] Human Rights Policy, Siam Commercial Bank https://www.scb.co.th/content/dam/scb/about-us/sustainability/documents/th-human-right-policy.pdf and see the figures in Assessment of Bank Policies on Human Rights by Fair Finance Thailand https://fairfinancethailand.org/bank-guide/topics/human-rights/

[10] InfoQuest, “CKP commencing COD of 1,220 MW Xayaburi HPP today after receiving full financial support of 135 billion baht” 29 October 2019, Accessed at https://www.ryt9.com/s/iq05/3059961

Picture: https://www.thestar.com.my/news/nation/2019/10/30/new-mekong-dam-opens-to-protests-and-dried-up-riverbed

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