[Statement] Assessment required to resolve whether the collapse of the Xe Pian-Xe Nam Noy dam was caused by alterations to the dam design and early filling of the reservoir
Assessment required to resolve whether the collapse of the Xe Pian-Xe Nam Noy dam was caused by alterations to the dam design and early filling of the reservoir.
Thorough probe required into the possibility that the disaster resulted from SK E&C’s pursuit of profit and KOWEPO’s unreasonable contract.
During the parliamentary inspection of the Ministry of Strategy and Finance, Democratic Party National Assembly member Kim Kyung-hyup brought into attention that the collapse of the Xe Pian-Xe Nam Noy dam may have resulted from excessive alterations to the dam design and expedited construction schedule, both of which were attempts by SK Engineering and Construction (SK E&C) to increase profit. It was also found that the Export-Import Bank of Korea encouraged the acceleration of the construction schedule by offering an incentive bonus of $4.8 million for early reservoir filling, as they were setting up the $80.8 million loan contract with the Laos government. Ensuing the collapse of the dam, SK E&C and the Korean Western Power (KOWEPO) were both occupied with dodging responsibility. With each side reporting different causes for the disaster, the true conditions that spawned the catastrophe still remain obscure. However, it is not too late. The government must conduct a thorough investigation to reveal the factors that lead to this disaster and execute the responsible measures.
According to Kim’s office, SK E&C started construction 7 months later than scheduled. Yet, SK E&C was able to start filling of the reservoir as initially planned, and even shortened the reservoir filling period from 6 to 4 months. This suggests that SK E&C expedited the construction schedule to procure the $20 million bonus for early reservoir filling. It has also been suggested that the dam design was altered to increase profit. During construction, the height of the auxiliary dams was decreased by 6.5 m compared to the original design, supposedly to cut costs. In fact, there are SK E&C documents that specifically focus on issues such as ‘Application of V/E (design changes) to secure extra profit of $19 million’. Immediately following the disaster and ever since, there have been accusations that SK E&C brought upon the collapse of the dam through such malpractices. Yet, for reasons of confidentiality, SK E&C is refusing to release the documents that contain details of the construction process such as the basic and implemented construction plans, even to Kim’s office at the National Assembly. There were even incidents regarding the deletion of news reports on SK E&C concerning the ‘expedition of the construction schedule’ and ‘disbursements of bonuses from early reservoir filling’.
Furthermore, the Xe Pian-Xe Nam Noy dam project was not part of the 2015 International Development Cooperation annual plan and had no assigned government budget. In May of 2015, the Ministry of Economy and Finance independently arranged to supply 4 separate loans to developing nations, and the Laos dam project was rewarded $58.1 million (₩68.7 billion) in December of the same year. The Laos dam project was approved without undergoing National Assembly budget review, despite being an Official Development Assistance (ODA) project. In addition, the very purpose of the ODA was undermined when Export-Import Korea Bank signed the loan contract that offered the incentive bonus for early reservoir filling. This instead catered to the corporation’s interest in maximizing profit. Such unreasonable contracts and excessive expedition of the construction schedule likely affected the safety features of the dam. Nevertheless, the government signed the contract without carefully assessing the dam’s safety, and without checking whether the project adhered to the ‘Safeguards’ of the Economic Development and Cooperation Fund.
This disaster is a clear indication that neglecting social responsibility and corporate ethics can threaten the very purpose of the ODA projects, which is to contribute to the welfare and development of the partnering country. Similar lessons must also be learned regarding the government’s irresponsible actions in guaranteeing undue profits to the corporations. Civil society has already voiced deep concerns that assisted development projects, executed carelessly, can destroy the ecosystem and negatively impact the lives of the local residents. It is not too late. The government must clearly determine whether SK E&C brought about the collapse of the Laos dam by reckless alterations to the dam design and construction schedule and whether there were other unattended safety concerns during the construction of the dam. To prevent future disasters in the Korean government assisted development projects, it is paramount to conduct a thorough probe into the Laos dam catastrophe and hold those responsible to account.
17 October 2018
Korean CSO Task Force Team for the Xe Pian-Xe Nam Noy Dam Collapse
Energy & Climate Policy Institute / Korean Federation for Environmental Movement/ KTNC Watch / PEACE MOMO / People’s Solidarity for Participatory Democracy / PIDA / Truth Foundation
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