The Vietnam Mekong River Commission has objected a contract signed by a Thai construction company to build the Xayaburi (or Xayaboury) hydropower plant on the Mekong mainstream in Laos.
MRC is an inter-governmental agency that works directly with the governments of Cambodia, Laos, Thailand and Vietnam on joint management of shared water resources and sustainable development of the Mekong River.
Vietnam's representative to the commission, Le Duc Trung, has charged that the Ch. Karnchang Public Company Limited's contract with the Lao Xayaburi Power Company violates the joint agreement made by the MRC's member countries.
Speaking to the media, on April 20, Trung said the Thai company's action contradicted the Lao government's pledge to suspend dam construction until procedures of notification, prior consultation and agreement were complete.
Trung reiterated the terms of an agreement made during the MRC Council's December 8 meeting in Siem Riep. Trung maintains that the MRC member states agreed to hold off on construction.
On Tuesday, the company notified the Stock Exchange of Thailand that its subsidiary, Ch Karnchang (Lao) Co Ltd, had signed a Bt51.8 billion-worth (US$1.69 million) contract for the engineering, procurement and construction of the Xayaburi hydroelectric power project with Xayaburi Power Co Ltd, according to a report published in the Nation on April 17
"The council agreed that further study needed to be conducted before the construction of mainstream hydropower projects," Trung said. "The Ch Karnchang Company's action could cause unnecessary misunderstanding in the region and the world.
According to documents the Thai firm filed with the stock exchange, construction began on March 15"”though it is unclear whether work actually took place. The company documents predict that work will conclude in the next 96 months.
Ninety five per cent of the power will be sold to Thailand.
The project has garnered widespread protest from environmentalists who fear that damming the Mekong River would devastate the river's ecology and the economies of downstream nations.
Due to the massive risk associated with the Xayaburi and other Mekong mainstream dams, a Strategic Environmental Assessment report published in October 2010 by the MRC recommends that decision-making on these dams be deferred for 10 years.
In December 2011, the four governments met once more and agreed to postpone their decision on the Xayaburi until a joint study on the trans-boundary impacts of the Mekong mainstream dams was carried out.
Trung, of MRC Vietnam, said his committee learned of the Thai firm's arrangement with the Lao power provider through media reports and has yet to verify the information officially.
"If it is true, we request the involved parties to abide by the commitments made by the Ministers of MRC member countries during the Siem Riep [meeting]," he said.