Nordic involvement in the Song Hinh hydroelectric project, Vietnam

2 Dec

Funding for the Song Hinh dam came from Swedish aid and Nordic banks. Sweden’s decision to fund the project was based on a flawed study carried out by Jaakko Pöyry. A series of Nordic consultants benefitted from contracts on the project.

By Chris Lang. Published in Watershed, Vol. 3, No. 3, March – June 1998

The 70 megawatt, US$142 million Song Hinh hydroelectric dam is currently under construction in Vietnam, funded by the Swedish International Development Cooperation Agency (SIDA), the Nordic Investment Bank and the Nordic Development Fund (NDF): a multilateral development aid organisation, comprising Denmark, Finland, Iceland, Norway and Sweden. Work began on site in 1995, with completion anticipated in late 1998. When completed, the reservoir will flood 45 square kilometres, flooding the forests, farmlands and livestock grazing areas of approximately 1,800 people, including people of the highland ethnic groups Ede and Bahnar.

In 1995, SIDA and NDF contracted consultants, including SwedPower and Jaakko Pöyry Consulting Oy, to carry out a review of the project. SIDA and NDF’s decision to fund the project was based on this review.

NDF states on its web-pages that in giving loans, “Priority is given to projects with a positive impact on the environment”. In the case of the Song Hinh dam, the positive impacts are to the Nordic companies which won the contracts to design and supply equipment for the dam. The links between SIDA’s and NDF’s funding and the benefits to the Nordic dam building industry are illustrated by the fact that all the contracts for the design of the dam and supply of machinery went to Nordic companies. Jaakko Pöyry’s “Environmental Review” was published after a bidding round for contracts to supply machinery was opened in late September 1995 — clearly the contractors were confident that approval for Nordic funding of the dam was likely to be approved. According to one report, one of the contractors, Asea Brown Boveri AG (ABB) was actually involved in organising the concessional loan funding for the project.

Song Hinh at a glance

• A 43 metre high, 800 metre-long earthfill dam on the Hinh River and five 15 metre-high auxiliary dams with a total length of 4,600 metres to contain the reservoir.

• A 45 square kilometre reservoir which will flood the homes of 299 families, or 1,732 people.

• A 70 megawatt capacity powerhouse.

• A 1.5 kilometre tunnel and 540 metre penstock to divert a maximum of 57 cubic metres per second of water from the Hinh River to the powerhouse and via a tailrace to the Con River, another tributary of the Ba River.

• A weir on the con River and a new irrigation system to irrigate 8,700 hectares.


Total cost US$142 million, to come from:

• SIDA: US$31 million concessionary credit (low interest loan), and a US$5.4 million grant for construction, supervision and environmental management.

• Nordic Investment Bank and NDF: US$20 million loan.

• Electricity of Vietnam: US$85.6 million.

A consortium of Swedish companies, ABB Generation AB and Kvaerner Turbin AB, will manufacture and supply machinery for the dam. Norconsult and VBB Anlaggning AB will complete the design of the powerhouse and waterways.

Jaakko Pöyry’s “Environmental Review”

SIDA and NDF’s decision to fund the project was based on a review of the project carried out in 1995. As part of this review, Jaakko Pöyry Consulting, the Finnish forestry consultants, produced an “Environmental Review” of the project based on Pöyry consultant Olli Kolehmainen’s visit to the site in September 1995.

The report states that its aims are:

“(1) to describe the main features of the Project, (2) to analyze critically the procedures and methods used in the EIA process in the Project, (3) to identify the main environmental and socio-economic impacts of the project and to present a practical assessment of them including a discussion of mitigative measures, and finally (4) to draw conclusions and make recommendations as an input for decision-making on support of the Project.”

In other words, it is a review of an existing EIA, (produced in 1992 by the Vietnamese Centre for Geography and Natural Resources and the Power Investigation and Design Company No. 1), not a review of the proposed Song Hinh project. Aim number 4 clearly states that the consultant for the “Environmental Review” will not attempt to address any fundamental problems with the project but will aim to support the project.

In addition, the study fails to address the “main environmental and socio-economic impacts” (aim number 3) in any meaningful way.

Resettlement without consultation

“. . . the resettlement of people is planned by Project management in cooperation with the local authorities. . . . The detailed design of the new villages is carried out by PIDC No. 1. No direct consultation with the people is required, but in principle, the preferences of the villagers, including tribal customs are considered by the designers.”

The consultant does not explain why “no direct consultation with the people” will be necessary, nor how the “preferences of the villagers” will be ascertained and subsequently considered by the designers.

Information not available

“The details of the plan [for resettlement villages] is not yet available, but the basic principle is to provide good housing of higher standard than those in the villages.”

The consultant does not discuss why the details were unavailable even to the consultant employed by potential funders, let alone to the villagers. Nor is there any mention of who will decide what is a “higher standard” of housing in the absence of consultation with the people who will actually live in the houses.

Inadequate compensation

“The local people have been evidently promised adequate compensation in the resettlement scheme presented to them. . . . 710 ha of cultivated land, 18,500 m2 of residential space and other infrastructure, which will be left underwater will be compensated.”

This amounts to compensation of an average of only 2.37 hectares per household or less than 0.5 hectares per person. Village people will receive compensation only for about 15 per cent of the total area flooded by the reservoir. No compensation whatsoever is proposed for flooded grazing land, forest land or fallow land.

Underestimation of resettlement costs

In a 1993 review of the energy sector in Vietnam the World Bank estimated US$5 million would be required to resettle 200 families from the Song Hinh reservoir. Jaakko Pöyry estimated US$2.19 million would be required for resettlement and compensation of 299 families. The consultant gives no explanation of how the sum of US$2.19 million was calculated, or why Jaakko Pöyry’s figure is less than half that of the World Bank’s earlier estimate.

Blaming “shifting cultivators” for deforestation

“. . . deforestation is a major issue, main cause being non-sustainable sedentary shifting agriculture”.

The consultant gives no evidence to support this statement. Nor is there any description of the history, culture, religion, traditions, farming practices (other than as “non-sustainable sedentary shifting agriculture”) of local communities.

No consideration of communities’ aspirations, livelihoods, needs . . .

“. . . about 3500 ha will be alternatively [sic] submerged or above the water level. The 3500 ha is mainly useless land . . . However, there may be a possibility to cultivate fast growing crops on this land in the period of falling water levels.”

The consultant makes no mention of the impacts of flooding 3,500 hectares of “mainly useless land” will have on local communities. This seasonally exposed area is 80 per cent of the surface area of the reservoir.

Failure to address environmental problems

“. . . no coherent plan for environmental management and mitigation has been included in the documentation available for the present review. The project management seems not to be aware of most of the recommendations presented in the EIA, which evidently have not been included directly in the project plans.”

In fact, only US$230,000 has been reserved for an environmental management and mitigation programme — this amounts to 0.16 per cent of the total project cost.

The Con River will receive on average 33 cubic metres per second from the power plant: a huge increase in flow from the present 0.6 cubic metres per second, and will cause a two metre rise in water level. Yet Pöyry’s report states: “The impacts of this have not been analysed in detail in the EIA.”

Further, only US$10,000 is included in the project costs for mitigation measures to reduce streambank erosion in the Con River.

“There are about 800 people working in construction.”

The consultant makes no mention of the likely impact of 800 people, many new to the area, on the forests, wildlife and the environment in the vicinity of the construction site. The use of the present tense here indicates that the “Environmental Review” was conducted well after work had started on site, clearly too late for any far reaching changes, which might have been suggested by the review, to be incorporated.

No discussion of impacts on downstream communities

“There will be a disadvantage of reduced water flow in the lower reaches of the Song Hinh. . . . This problem is not very well addressed in the Project.”

The consultant makes no suggestions for resolving this problem. There is no discussion of the impacts of reduced flow on fish in the river, of how many people live downstream of the dam, how livelihoods will be affected or whether wildlife will be affected.

“Although the reservoir will catch most of the sediment in the Hinh river, it will not have an impact on the estuary of the river Ba and the coastal waters, because the total discharge of solids in the river Ba will not be affected by more than about 10%.”

In other words, sediment in the Ba River will be reduced by 10 per cent. Jaakko Pöyry’s report makes no reference to any studies of the potential impact on the delta and farmland irrigated by the Ba River.

In deciding to fund this project, based on what is clearly a flawed “environmental review” process, SIDA and NDF rescued a financially dubious and environmentally and socially damaging project in Vietnam to support Nordic dam building consultant and contractors through contracts to ABB Generation AB, Kvaerner Turbin AB, Norconsult International, VBB Anlaggning AB, SwedPower, Skanska and Jaakko Pöyry Consulting AB.


“Telecom and power dominate Swedish mixed credits”, Development Today, Vol. VII, No. 2, 10 February 1997.

“Sweden to finance Song Hinh project in Vietnam”, Hydro Review Worldwide, Vol. 5, No. 1, March 1997.

Jaakko Pöyry (1995) “Song Hinh Hydropower Project Environmental Review”, Swedish International Development Cooperation Agency, Nordic Development Fund. Helsinki, 6 October 1995.

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