Agreement Reached on Compensation for Laos Dam Collapse... Worth 110 Billion KRW

Se Pian-Senamnoi Hydroelectric Power Dam in Attapeu Province, Laos. (Provided by SK Engineering & Construction)

[Asia Economy Reporter Lee Chun-hee] Compensation for damages from the collapse accident of the Laos Xe-Pian Xe-Namnoy Hydroelectric Dam, which occurred during heavy rains in 2018, has been finalized. Approximately 100 billion KRW has been allocated for damage compensation and restoration costs.

According to local Lao media on the 9th, Son Sai Siphandone, Deputy Prime Minister of Laos, recently stated in the National Assembly that "Attapeu Province of Laos and the project operator of the Xe-Pian Xe-Namnoy Hydroelectric Project, 'PNPC,' agreed on April 10 to compensation and restoration costs amounting to about 8.28 trillion kip (approximately 110.1 billion KRW), and compensation is currently underway." The agreement on compensation was reached first as the compensation process was delayed due to differing positions between the two sides regarding the cause of the accident.

PNPC is a consortium joint venture formed by four companies?SK Engineering & Construction (26%), Korea Western Power (25%), Thailand's RATCH (25%), and Laos LHSE (24%)?to promote the Xe-Pian Xe-Namnoy Dam project. Since 2005, SK Engineering & Construction and Korea Western Power have been in contact with the Lao government to advance the project. Subsequently, the four companies formed a consortium and began construction in 2013.

Originally, commercial operation was planned to start in February last year, but the collapse accident occurred on July 23, 2018. At that time, the auxiliary dam collapsed, releasing 500 million tons of water at once, flooding several villages in the Sanamsay area of Attapeu Province downstream. As a result, dozens of residents died or went missing, and about 6,000 people were displaced.

SK Engineering & Construction has been conducting rescue, relief, and restoration support activities since immediately after the accident. The Korean government also dispatched emergency relief teams three times to continue supporting damage recovery. Currently, the auxiliary dam has completed restoration and reinforcement work and has been in commercial operation since December last year, operating normally.

At the time of the 2018 accident, residents in a village near the collapsed auxiliary dam were seen taking refuge on the roofs of houses submerged in water.
[Image source=Yonhap News]

Deputy Prime Minister Siphandone stated that about 4.75 trillion kip (approximately 63.2 billion KRW) will be paid as compensation for victims and property damage. The remaining 3.53 trillion kip (approximately 47 billion KRW) will be used for various infrastructure restoration costs. It is known that construction of 700 houses for displaced residents has already begun using the compensation funds.

An SK Engineering & Construction official explained, "This agreement was decided as PNPC proactively agreed to compensate for damages regardless of the cause of the accident," adding, "We will actively support prompt damage compensation and restoration." They further added, "The funding for this compensation was already accounted for in the previous fiscal year, and a significant portion has been covered through insurance policies taken out."

However, no conclusion has yet been reached regarding the cause of the accident. In May last year, the Lao investigation committee concluded, based on the investigation by the Independent Expert Panel (IEP), that "the dam collapse cannot be considered an unavoidable accident." The IEP claimed the accident was effectively preventable with appropriate measures, asserting it was a man-made disaster.

In response, SK Engineering & Construction stated, "The IEP investigation results lack scientific and engineering grounds and do not align with the detailed geological surveys conducted before and after the accident," and have raised objections.