Funding for Se San4 September 2002
Tim Sharp reports on Vietnam's plans to develop the US$2B Se San cascade, with financial aid from Russia
DESPITE considerable environmental and social concerns, Vietnam is pushing urgently ahead with the development of a cascade of six hydro power dams over a 180km long stretch of its portion of the Se San river in the Central Highlands. On completion in about 12 years, the cascade will contribute over 1750MW to Vietnam's total installed capacity at an estimated cost of over US$2B.
Progress to date includes commissioning the last of the four 180MW turbines at the largest of the six projects, the 720MW Yali scheme just downstream from Kontum provincial capital, in late 2001. The country has also begun construction of the second project, the 273MW Se San 3, effective 15 June 2002. Only six weeks later on 22 July, Prime Minister Phan Van Khai ordered state-owned utility Electricity of Vietnam (EVN) to begin feasibility studies for the 330MW Se San 4. This project is the cascade's second largest and is planned for construction in 2004.
The remaining projects - the 110MW Pleikrong, 100MW Se San 3A and 220MW Upper Kontum - are all in the pipeline.
The chief environmental concerns, namely downstream flash flooding and poor water quality since 1999, have been caused largely by erratic Yali reservoir management, it has been claimed. Impoundment began in 1996 but before the first turbine was commissioned in May 2000, large volumes of water were released from the reservoir in 1999 without informing downstream communities.
The floods 'caused local people living along the river [in Vietnam] considerable damage both materially and mentally', a February 2001 Vietnam National University (VNU) impact study of the affected communities found. 'However, they have not received any support or any type of compensation from the government'.
Such experiences from the Yali project have sparked fresh fears in both Vietnam and Cambodia in relation to Se San 3, 20km downstream from Yali. A major consequence has been the withdrawal in October 2000 by the Asian Development Bank (ADB) of its proposed US$60M loan to the project. This occurred after Vietnam turned down an ADB offer of a further US$1.8M to study the downstream impacts of Se San 3.
No formal reasons for Vietnam's actions have been given but it is generally understood that, aware of the causes of the flash floods, in urgent need of additional power and now in dialogue with Cambodia, it is confident that Se San 3 will not exacerbate downstream conditions. For its part, Cambodia acknowledges that these have been greatly mitigated since power generation at Yali commenced.
An important upshot of these developments is that Russia has become an important source of finance for the Se San cascade. After funding Yali, it has now agreed to provide US$58M in export credits for Se San 3's two 136.5MW turbines, plus another US$40M for Pleikrong. The balance of around US$220M for Se San 3 is being met through a US$140M syndicated loan among four Vietnamese banks plus US$80M in EVN equity.
The next project in the cascade will be Se San 4 downstream from Se San 3, relatively close to the Cambodian border. Construction is scheduled to begin in 2004, roughly two years before Se San 3 is commissioned in 2006/7.
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