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One year from Laos dam collapse, insurers urged to help

Rights groups say thousands of affected villagers in need of aid

A woman walks on a flooded road after the Xepian-Xe Nam Noy hydropower dam collapsed in Attapeu province, Laos last July.   © Reuters

PHNOM PENH/SEOUL -- A year on from a devastating dam collapse in southern Laos, rights groups are pushing major insurance firms to help make compensation available for thousands of victims still reeling from the disaster.

An auxiliary dam at the under-construction Xe Pian-Xe Namnoy hydropower complex collapsed on July 23 last year, unleashing a wall of water that killed at least 71 people and left thousands homeless.

According to a report released on July 23 by Inclusive Development International and International Rivers, major insurance companies including AIG of the U.S. and South Korean insurers Samsung Fire & Marine and Korean Re may end up footing some of the bill of its catastrophic failure.

These insurers hold about $50 million in liability coverage between them across two policies, according to the report.

Samsung Fire & Marine confirmed to the Nikkei Asian Review that SK Engineering and Construction, the lead developer and builder on the project, had purchased coverage from the insurer, but declined to comment further, citing an ongoing investigation into the dam collapse.

Korean Re said it was "not in a position to make any comment on the accident in question," while AIG declined to comment.

The destruction from the dam in the Sekong River basin spread from the south of Laos to northern Cambodia, destroying crops and property up to 80 km away. Much of the land, once used for farming, remains covered in silt and debris.

Thousands of Lao villagers are still living in displacement camps, according to the report, while construction is continuing on the dam, which is scheduled to be completed this year.

The project is a joint venture of SK Engineering, state-owned Korea Western Power, Thailand's state-owned Ratchaburi Electricity Generating and Lao Holding State Enterprise.

The Laos government conducted an inquiry into the dam collapse but has yet to release its results. However, government officials in May commented on the findings, saying it ruled out "force majeure," or an unforeseeable act of nature, and pointed to erosion of the dam's foundation.

Inclusive Development International and International Rivers are calling for the companies and governments involved in the project to establish a fund to help affected villagers.

"The four project developers that made this project possible and will profit from it for years to come are ultimately responsible for the collapse," David Pred, executive director of IDI, told Nikkei. "They must repair the grave harm that they caused to thousands of people in Laos and Cambodia."

The groups' report cites an internal document from SK Engineering, reported by South Korean media, that suggests the company made alterations to the original design, including lowering the dam's height by 6.5 meters and changes to construction materials. The document reportedly made reference to a $19 million saving in construction costs.

SK Engineering told Nikkei that it does not accept the report, saying it lacks "scientific evidence." It has also publicly disputed the findings of the Laos government.

After the collapse, relatives of those killed received a one-time payment of $10,000, while other affected families received a one-time payment of around $70. The Laos government provides a monthly allowance of about $30 to those in the hardest-hit villages.

SK Engineering told Nikkei that it paid compensation to the families of those killed, and said it will actively cooperate in the compensation process for other victims after insurance companies complete their own investigations by August.

While these investigations are going on, the rights groups are calling on the insurers behind the project help ensure victims receive assistance.

"Most affected people are unaware of the existence of this coverage, much less their right to make claims, because it has not been disclosed publicly," the report said.

Laos has more than 400 hydropower dams either existing or in the pipeline, including dozens of large-scale projects. The country wants to export electricity to spur its economic development.

Courtney Weatherby, a Southeast Asia research analyst at the Stimson Center, an independent U.S. policy think tank, said the lack of accountability surrounding the collapse was disappointing for the sector as it faced growing risks from climate change.

"It's really a missed opportunity for someone to take leadership and show how you could handle this in a most effective way in line with best practices," Weatherby told Nikkei.

She added that the collapse was one reason that rhetoric on hydropower in Laos has begun to shift. Competition from China and the rollout of renewables in the region had also tempered the country's ambitions to become the "battery of Southeast Asia," she said.

"The ambition [to export power] has not gone away but there is a growing shift away from the term 'battery of Southeast Asia' for a number of reasons. One, I think Laos has realized it's a small fish in a big pond," Weatherby said.

"When you combine that with the fall out from Xe Pian-Xe Namnoy, on one hand the Laos government is still very much moving ahead with new project planning... but at the same time there has been this pause where there's this sense that the Laos government does need to regroup and do a serious review of all of the projects."

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