Build, Operate, Transfer
Seven dams now stand on the Nam Ou, built as a single project under a single concession covering the whole river. Laos did not finance them and does not own them yet — which is the point of the arrangement, and also the problem.
The boat from Nong Khiaw up to Muang Ngoi takes about an hour against a current that is not what it used to be. On the longer leg the following morning, everybody gets out partway, carries their bags up a bank to a waiting tuk-tuk, rides ten minutes around a concrete wall and climbs into a second boat on the flat water above it. Downstream is simpler and worse: the run from Nong Khiaw to the Mekong, which was one of the good days of travel in Southeast Asia, does not happen at all any more, because the lower Nam Ou is a reservoir.
There are seven dams on this river, numbered from the mouth upward, and they were not built one at a time by whoever turned up. They were built as one project under one contract. The first three began generating in October 2016 and the remaining four in September 2021, and together they hold about 1,272 megawatts. Almost none of that power is for the villages the boat passes.
A whole river, in one contract
The Nam Ou cascade was agreed with Sinohydro, since absorbed into the state-owned PowerChina group, as a build-operate-transfer concession running 29 years from commercial operation, on a total investment usually put at around US$2.7 billion. The planning phrase attached to it was "one reservoir, seven cascades" — the river was designed as a single hydraulic system rather than as seven schemes that happened to share a valley, so that the water released by one dam arrives as the inflow of the next. It is a coherent piece of engineering. It also meant that a foreign contractor was handed an entire river basin and told to optimise it, which had not been done in Laos before, and which set the template for what came after.
What BOT actually means
Under a build-operate-transfer concession the developer finances the dam, builds it, runs it for an agreed term selling the output under a long-term purchase agreement, and hands the asset to the state at the end. The government usually takes a minority equity stake, collects royalties, taxes and a share of dividends along the way, and owns the thing outright when the clock runs out. It requires almost no public capital at the start, which is exactly why a poor country reaches for it. It also means the most productive decades of the asset's life belong to somebody else. By the early 2020s Laos had brought something in the order of eighty hydropower plants into operation on variations of this structure, and electricity had become one of its largest exports, most of it sold across the border to Thailand.
Laos does not really sell electricity. It sells the right to build the thing that makes it, and takes a minority share of the proceeds for a generation.
The bill
The strategy has a slogan — "battery of Southeast Asia" — and it has produced a debt problem rather than a revenue one. Électricité du Laos, the state utility, is committed to buying domestic output under long contracts while charging its own customers in a currency that has been falling: the kip lost roughly half its value against the US dollar across 2022 and 2023, and public and publicly guaranteed debt has sat above 100 per cent of GDP. In March 2021 the government signed a 25-year concession over the country's high-voltage transmission network — everything above 230 kilovolts — to EDL-T, a joint venture majority-owned by China Southern Power Grid. A state that had run out of ways to service its power-sector debt sold the wires as well as the water.
Attapeu, July 2018
On 23 July 2018 a saddle dam at the Xe-Pian Xe-Namnoy project in the far south gave way after days of rain. The flood killed at least 71 people, emptied villages across Sanamxay district and carried on over the border into Cambodia. The developer's first account blamed the weather. The independent expert panel convened afterwards concluded that the foundation was the problem — erodible soils and seepage the design had not accounted for — and that the failure had been preventable. Vientiane suspended approvals for new hydropower projects and ordered safety reviews of the existing ones. The suspension did not last, which is the part worth remembering about it.
Downstream
The Nam Ou is a tributary, and the argument about the Mekong itself is larger. Xayaburi, the first dam on the lower mainstream, entered commercial operation in October 2019 over objections from Cambodia and Vietnam, because the Mekong River Commission's prior-consultation procedure obliges a government to consult its neighbours and does not oblige it to stop. Don Sahong followed at the Khone falls. Dams hold back the sediment that builds the delta and interrupt the migrations that one of the largest freshwater fisheries on earth runs on; 2019 saw the river at some of the lowest levels ever recorded, and the argument over how much of that was drought and how much was upstream storage has not been settled.
None of it is visible from a boat, which is the odd thing. What you see on the Nam Ou is flat green water where there was a current, a wall, a new village of identical houses with tin roofs and a mains connection, and a boatman who checks his phone for the release schedule before he will quote you a departure time. The households that were moved got electricity and a road they did not have before, and it would be dishonest to pretend that counts for nothing. The question the arithmetic asks is who holds the asset for the balance of the concession — the twenty-nine years started in 2016 on the first three dams and in 2021 on the other four, so the handover falls in the 2040s and 2050s — and who is carrying the loan in the meantime, and the answer is not the same in both cases.