World Bank Denies Access to Documents on Laos Dam Project

31 January 2003

The World Bank has rejected requests to disclose several key documents concerning the controversial $1.1 billion Nam Theun 2 hydropower project in Laos.

The documents — the "power purchase agreement" and the "concession agreement" — must stay private, the Bank said, because they contain proprietary commercial information that the Bank said it promised not to reveal.

Critics of the dam project who requested the two documents, however, consider the information they contain essential to the evaluation of the project’s economic viability and its other consequences.

"This is critical information for the public to access, so there can be an informed debate about the benefits of the project to the Lao people," according to Aviva Imhof, Director of the Southeast Asia Program for the International Rivers Network.

The disagreement reprises conflicts over access to similar documents involving other projects, and other IFIs. Disclosing what project developers consider to be sensitive commercial information, IFIs argue, would inhibit private sector involvement. IFI critics, on the other hand, say public funds should not be spent if the project’s terms are not publicly available.

World Bank Explains Its Position

A Dec. 23, 2002, denial letter, signed by Robert Anton Mertz, the NT2 Project Manager based in Washington, D.C., explains that the Bank’s disclosure policy does not permit disclosure of the two documents, which are between the government and private developers. In further seeking to justify the policy, Mertz misrepresents the conclusions of an independent inspection panel the Bank created around another controversial project.

The Mertz letter indicates that "where documents and information are provided to the Bank on the explicit or implied understanding that they will not be disclosed outside the Bank, or that they may not be disclosed without the consent of the source, `the Bank must treat such information accordingly’ (Disclosure Policy, para. 84)."

"In accordance with the Disclosure Policy," the letter continued, "the Bank does not make publicly available documents that contain proprietary information without the express permission of the owner of such information."

The letter goes on to note that "this constraint," particularly as applied to a power purchase agreement was addressed in the June 7, 2002, World Bank Inspection Panel’s "Report and Findings on the Uganda Third Power Project, the Power IV Project and the Bujagali Hydropower Project." The Uganda project was to receive a World Bank loan guarantee through the International Development Association (IDA). There too, an environmental group sought access to the Power Purchase Agreement, the agreement on financial terms reached between the government and the developer but with the necessary approval of the World Bank.

The Mertz letter continues: "Management stated that it was not opposed to the disclosure of this document, but had no authority to release it, inasmuch as the Power Purchase Agreement is a proprietary agreement and that IDA is not at liberty to disclose it without the agreement of the signatories (Bujagali Panel Report, para. 90)."

Mertz reported that the Inspection Panel found that `there is no specific requirement that the PPA be disclosed’ and that "Management’s actions have been consistent with IDA’s Disclosure Policy" (Bujugali Panel Report, para. 91)."

Inspection Panel Urgings to Disclose Overlooked

Mertz, however, did not quote all of what the Bank’s inspection panel said, in the same paragraph. The three-member panel found that although not releasing the PPA was not a direct violation of the Bank’s disclosure policy, its release is "vital" for public understanding of the project. "It seems evident that full disclosure of the PPA is vital if the intent is to place the public in a position to analyze, understand, and participate in informed discussion about viability of the Project and its impact on the economy and well-being of Ugandans," the panel said.

In Uganda, as freedominfo.org has reported, a lawsuit eventually forced the release of the power purchase agreement. The Ugandan High Court agreed that to keep it secret violated the Ugandan Constitution. Subsequently, critics of the project have released a detailed analysis of the financial information.

A subsequent review of the PPA for IRN by Prayas Energy Group of India concluded that Ugandans would pay $20-$40 million annually in excessive power payments if the World Bank-financed dam proceeds according to plan.

IRN Makes Case for Release

The International Rivers Network believes both documents should be public. Imhof stated: "The Concession Agreement is critical to outlining the legal obligations of the respective parties, including the obligations of the power company for mitigation and compensation measures. As there is no real legal system, nor any free flow of information in Laos, it is absolutely critical that Lao citizens and outside observers have access to this information, particularly given the Lao government and project developer’s failures in the past to adequately
compensate citizens for their losses. The power purchase agreement contains critical information regarding the project’s economic viability and the benefits (or lack thereof) for the Lao government. Again, this is critical information for the public to access, so there can be an informed debate about the economic benefits of the project to the Lao people."

Ask the Developers, the Lao Government

Having rejected the request for NT2-related documents, the World Bank’s Mertz advised, "You may wish to contact the developers and the Lao PDR Government for these documents." He noted that "the logging mission report, however, is being prepared for publication. We expect it to be posted on the government’s website for the Lao PDR in the near future and to be available to IRN and to the public at large at the same time."

Mertz added: "On the subject of disclosure, let me add that the widely shared concern for transparency in dealing with critical project issues is the reason why the websites of the project and the Lao government provide substantial public access to information and documents about the NT2 project. It is also why we have posted information on our development work with the Lao Government on our own website. We believe it is the government’s intention to continue to add information and documents as they become available – such as the logging mission report – so that all public parties can have equal access to the relevant information."

Imhof Replies, Call Bank Dissemination Efforts `Bad’

Imhof offered a different view, writing in late January 2003: "The site is www.lao-energy.com, and no the logging report has not gone up there, at least as far as I can tell. No surprise to me. The web site has very little information on it, and most of it I already have. In terms of whether the Bank has been good about disseminating information: generally, they have been pretty bad at disseminating information."

She continued: "Our experience is that it takes months of persistence before a document will be shared, even if the Bank has stated from the outset that it is willing to disseminate the information. We are often told that the document will be finished in a week or two, and it drags on for months without hearing anything. That’s the case with this current logging mission report. Now, because of the Bank’s website, there is definitely more information available than in the past, but we still find that critical documents such as the power purchase agreement or concession agreement are withheld on spurious grounds such as "commercial in confidence" or that the government won’t allow disclosure."

Imhof concluded, "We believe that if a government is seeking funding from a public agency like the World Bank, it must agree to release all relevant documents in a timely manner."

As for the availability of materials from the government or the developer, she commented: "The government is generally unresponsive to any requests for information. The consortium has been more responsive in recent times, but again the situation occurs whereby they promise to send documents, which never arrive. We are still waiting for the completed version of the EIA, which was promised to us months ago."

By Toby McIntosh

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ABOUT IFTI WATCH

In this column, Washington, D.C.-based journalist Toby J. McIntosh reports on the latest developments in information disclosure in International Financial and Trade Institutions (IFTI).
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