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Myanmar, Cambodia, Laos

Laos to investigate possible construction flaws after dam collapse

South Korea's SK and Korea Western Power among builders of $1bn project

When the dam broke on Monday evening unleashing five billion cubic meters of water, flash floods hit the homes of more than 1,300 families or 6,600 people   © Reuters

BANGKOK/SEOUL -- The Lao government will look for possible construction flaws that resulted in the collapse of the hydroelectric power dam in southern Laos that flooded surrounding villages earlier this week killing more than 20 and displacing thousands.

A source at the ministry of energy and mines told the Nikkei Asian Review that heightened water levels due to heavy rains may not have been the only cause for the collapse of the 90% completed dam.

An investigation into the disaster is expected to begin soon. The developer and operator of the dam, a joint venture between South Korean, Thai and Lao companies, dispatched experts and related agencies to the scene on Wednesday. South Korean President Moon Jae-in has also sent a rescue team.

In a rare televised press conference, Lao Prime Minister Thongloun Sisoulith announced late Wednesday that 131 people were still missing in the flooded areas of Attapeu. The dam broke on Monday evening unleashing five billion cubic meters of water on surrounding areas. Local media earlier reported that the death toll has reached 26 while more than 3,000 are awaiting rescue and 1,300 houses were damaged. Photos and video footage from local news agencies and social media show villagers stranded on the rooftops of their submerged homes.

The dam was one of five built to divert water around the main dam of the 410-megawatt Xe-Pian Xe-Namnoy Hydroelectric Power Project. The saddle dam was "fractured" by rising water levels caused by heavy rainstorms, according to Thai state-owned Ratchaburi Electricity Generating Holding, one of the project investors.

Other joint venture partners include South Korea's SK Engineering and Construction, Korea Western Power and Lao Holding State Enterprise. The project was slated to start operation in 2019. SK Engineering is the main builder of the $1 billion project with a 26% stake, followed by Ratchaburi and Korean Western Power which control 25% each.

The collapse hit the stock of the parent of SK Engineering, SK Holdings, on Wednesday. Shares in SK Holdings, which owns 44.5% of SK Engineering, fell by 5.11% to 260,000 won, by far underperforming the benchmark Kospi that dipped just 0.31%.

"We will do our best to prevent additional victims in cooperation with the Laos government," said SK Engineering in a statement. "We will find out causes of the incident thoroughly and take necessary actions quickly."

SK Holdings is South Korea's third-largest conglomerate that also controls chipmaker SK Hynix and SK Telecom. SK Engineering is a mid-sized builder in the country and its portfolio includes roads, railways, ports, factories and condominiums.

The five-year dam project, which was supposed to be completed by February next year, was a big deal for the company which won a 750 billion won ($668.6 million) order to construct it. SK Engineering was also promised dividends for the sale of electricity that will be generated from the 410 megawatt-hydropower dam, estimated to be 130 billion won per year.

Land-locked Laos, which is one of the poorest countries in Southeast Asia, has been aggressively building dams on its rivers to sell electricity to neighboring countries.   © Reuters

South Korean President Moon said on Wednesday "Our government should come forward for the rescue activities with no hesitation because our company has been involved in the dam construction project."

Landlocked Laos, one of the poorest countries in Southeast Asia, has been aggressively building dams on its rivers to sell electricity to neighboring countries. More than 70 hydropower projects have either been planned or are already in operation.

This tragedy could put the brakes on its push to become the "battery of Southeast Asia" as safety concerns have again come to the fore.

International Rivers, a nongovernmental organization that had raised concerns over the country's dam construction, said in a statement released after the disaster that many of the dams that are planned and in operation are not designed to cope with extreme weather events.

The NGO pressed authorities and stakeholders to "urgently assess the ability of dams to withstand extreme weather events and act to ensure dams are able to accommodate them."

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