Interview: Improved feasibility studies may help hydropower sustainability in Laos: IFC official
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E-mail Xinhua, August 22, 2014
The improvement of hydropower development feasibility studies could help the sustainability of such projects into the future, IFC Senior Operations Officer for Laos Kate Lazarus told Xinhua on Friday.
In collaboration with the World Bank Group and Japan International Cooperation Agency (JICA), the International Finance Corporation (IFC) is working with the Ministry of Energy and Mines to develop a template and guidelines for developers to ensure all required technical aspects are perused at the feasibility study phase.
"Our support hopes to lead to more consistent and higher quality hydropower feasibility studies, contributing to long-term project sustainability," Lazarus said in an exclusive interview with Xinhua.
In June, a workshop co-hosted by the Ministry of Energy and Mines, the Ministry of Natural Resources and Environment, IFC, and the World Bank, identified the need to develop a template for developers undertaking feasibility studies.
Feasibility studies are key to describing a project's overall concept, description, justification, cost benefits, and investment risks. The studies provide supporting information and undertake analysis regarding technical, social, environmental, economic, financial, and safety aspects.
"To ensure the government receives the information it needs on project feasibility, hydropower developers need guidance to support their work," Lazarus said. "Currently such comprehensive guidance is not available. Without a guideline on how to conduct the feasibility study, consistency may vary between projects. Also, the quality of a feasibility study without a guideline may not meet expectations, impeding project development and understanding of project material."
Lazarus stressed the highly technical nature of feasibility studies and their importance in helping both hydropower developers and the government identify issues up front. Feasibility studies are the important first step towards understanding project risks and how risks might be mitigated.
"The guidelines will outline what specific technical and engineering aspects of project development and operations are requested as well as key social, environmental, economic, and financial risks need to be included in the developer's feasibility study."
The construction of a hydropower plant is distinct from other construction projects as it involves planning for the use of the entire river basin. According to Lazarus, there is a need to plan and design projects in a more coordinated manner to ensure water can be optimally used and managed. Addressing gaps in power generation during the peak dry and rainy reasons also needs to be considered and reflected in the dam's final design.
Lazarus said he was confident that if developed sustainably, hydropower could continue to contribute greatly to the Lao economy as a renewable source of energy and an important source of income.
"At IFC, we aim to work with hydropower developers to ensure their development has the long-term in mind. However, for hydropower development to be equitable for all stakeholders, sustainability is key," Lazarus said.
"Strong environmental and social management systems, for example, provide hydropower projects with the necessary internal policies, human resource capacity, worker safety, and down-stream impacts. Taking such sustainability measures into account not only makes projects more profitable, but strengthens business performance."
Capacity building also plays an important role in the improvement of feasibility studies. Once the template and guidelines are finalized, capacity building will commence in the form of training government officials, sharing of updated documents through the Hydropower Developers Working Group and the preparation of case studies to examine lessons learned from past projects.
Into the future the IFC plans to continue working with hydropower developers, financiers, and governments in the Mekong region in order to promote a sustainable hydropower sector.
"Our support may develop and expand in upcoming years, but our focus to raise the bar in environmental and social standards in hydropower development will remain consistent," Lazarus said. Endi
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