Article originally published on the IFC website.
Seven hundred million people live without electricity in Asia. Several countries, including Lao People’s Democratic Republic, Myanmar, Nepal, and Pakistan, are tapping into their hydropower potentials to generate electricity for domestic consumption and exports, which will be a big boost to their economic development. To ensure the sustainability of such developments, IFC is working with both the public and private sectors to raise standards and enhance collaboration between the two sides.
“Hydropower demands are growing too fast to limit your scope to one country,” said Kate Lazarus, team leader for IFC’s Mekong sustainable hydropower program. “We’re approaching sustainability from an Asia-wide perspective.”
With the support of the Australian and Japanese governments, IFC kick-started its sustainable hydropower program in 2012 in Lao PDR. Since then, IFC has been helping the government, hydropower companies, and banks to adopt IFC’s Performance Standards to improve their environmental and social risk management. IFC also helped establish the Hydropower Developers’ Working Group, which enables hydropower companies to get into policy debate and shape regulations that impact their projects. This year, the working group established a subcommittee to contribute insight to the drafting of the Small Hydropower Decree, which will shape the future for small hydropower project development in Lao PDR.
“Lao PDR’s hydropower landscape is a mix of mainly large hydropower projects with many small tributary projects in the pipeline,” said Bounleuth Luangpaseuth, CEO and President of Luangpaseuth Corp. and Co-Chair of the Lao PDR Hydropower Developers’ Working Group. “With IFC’s support, hydropower companies have been able to re-shape the development of the Small Hydropower Decree – a very important step for the industry.”
In neighboring Myanmar, which has 100,000 megawatts of hydropower potential, there is a growing interest for investors to put their capital on hydropower deals. In January, IFC began its work in the country’s hydropower sector by co-hosting a multi-stakeholder workshop with the World Bank, attracting more than 160 participants. IFC is also trying to replicate the activities of the Lao PDR Hydropower Developers’ Working Group by establishing a similar one in Myanmar.
“There is common interest in Myanmar to develop hydropower sustainably,” said Lazarus. “We’re working to support the government to get the policies and regulations they need into place to ensure environmental and social standards are met when projects begin to break ground.”
This year, IFC plans to commission the first country-wide strategic environmental assessment to identify and achieve broad consensus on a balanced, equitable, and sustainable development pathway for hydropower in Myanmar over the next 20 years and beyond.
Having achieved success in providing environmental and social advisory services to officials and developers in Lao PDR, IFC is now replicating this model in Nepal to help the country sustainably tap into its 3,000 megawatts of hydropower potential. The electricity generated will help Nepal address its chronic power shortages, which currently result in 12- to 14-hour power cuts; it will also be exported to Bangladesh and India.
To increase the supply of electricity in Pakistan, IFC agreed in April 2015 to invest $125 million in China Three Gorges South Asia (CSAIL), a subsidiary of the state-owned China Three Gorges Corp. The investment will fund a series of hydro, solar, and wind power projects that will provide electricity to more than 11 million Pakistanis. As the country’s hydropower sector grows, IFC is advising the Pakistani government officials and developers on taking a basin-wide approach to developing the Jhelum-Poonch River Basin so that they can better understand the environmental and social risks involved.
“We want to set the standard for sustainable hydropower development in Asia,” said Lazarus. “We aim to raise awareness of the business case for sustainability and cultivate a new sense of accountability among developers.”