Gia Nghĩa, 06 Thang 07, 2010.

Dear Sirs,

Stakeholder comment for DakRTih Hydropower Project, located in DakrLap District of Dak Nong Province near Gia Nghia Town, in the Central Highlands of Vietnam, developed by General  Construction Company No.1 (CC1). 
Web link: http://cdm.unfccc.int/Projects/Validation/DB/XXLEXAV6JY5N7F5W3UM54BKZBNQ4WA/view.html

We would like to notify the EB and the validator of this project that the project is not additional and should not be considered as a CDM project.

*Timeline
That the project is not additional is clearly proven in the timeline defined in section B5 of the PDD.

The timeline of the project clearly states that the project starting date was before any real action was taken to secure a CDM status. Only one board meeting took place to discuss CDM. Even though one board meeting had taken place to discuss CDM, how would the project owner be able to calculate the potential benefits the project could receive? Normally one would also expect the project owner to meet with CDM consultants while preparing the project and taking the investment decision. Under normal circumstances CDM would also be considered as part of the feasibility study report. Especially to calculate the benefits the project might gain from CDM considering the huge capital required to construct this project. We assume that this real CDM consideration has never taken place.

We request the DOE to cross-check the CDM consideration by validating documents such as the Feasibility Study Report submitted to the local authorities in 2007 to determine if the project owner has considered CDM prior to the start of the project and took real action to secure the CDM status. We request the DOE to particularly validate documents that were prepared before the starting date of the project and take into account revenue from CDM. 

Further doubt regarding the additionally is raised by the slow process of real actions to secure the CDM status. In 2007 and 2008 only two MOU’s have been signed with the CDM developer. At that time the project was already under construction thus the project owner must have had sufficient funding to construct and operate the project!

*Slow PDD preparation
The PDD states that in 2009 data collection for WCD and PDD development took place. One year for data collection for a project that already started construction (i.e. all data is already fixed and available) is extremely long and why was this process not completed in 2008? It raises the suspicion that the project developer may have only signed a contract/got in touch with the project owner in 2009, instead of 2007 as claimed. We request the DOE to carefully verify the actions and documents available between the signing of the MOU and June 2009 when the timeline specifies buyers were sought for CERs of this project.

The project will start operation in January 2011. The PDD was published for stakeholder comments in June 2010. According to the UNFCCC website the oldest projects from ECOTAWA are still under validation (1 year later) while also other CDM procedures need to be completed. This means that the project is probably registered by the year 2012, or one year after the start of the project. This is a clear indication that the project cannot be a CDM project. It will be able to operate without CDM revenue.

*Irrelevant information
To claim of additionally is substantiated with a large amount of irrelevant information.

*Developments after starting date
The PDD describes the high inflation as a difficulty that the project owner faced, especially with regards to a high inflation in the end of 2008. However, these developments were after the starting date of the project and thus not relevant. Since the project already started the consequences of the higher inflation rate may have been limited for the project owner.

*First large project in province
The fact that the project is the first project with more than 30 MW capacity in the province is irrelevant because the project owner operates nation-wide, while it’s headquarter is in Ho Chi Minh City (only 2 hours from the project site). The project owner has projects all over Vietnam, as can be verified on the corporate website and is assumed to have the ability to enable sufficient resources to establish such a project in Dak Nong Province.

*Comparison of other projects
The project is compared against 5 other large-scale hydropower projects developed in Vietnam since 2004. 

Two projects in that list were developed by privately owned companies. It is known that privately owned companies have more difficulty to negotiate electricity purchase contracts and obtain funding than their state-owned counterparts. However, the PDD does not compare the two privately owned hydropower plants because the project owner is state-owned. This is rather odd, because especially for these large scale projects it is an advantage to be a state-owned company. In other words, if those two privately owned projects could be constructed, why couldn’t the project owner develop his project without CDM? This should be further substantiated in the PDD.

*Limited experience Project developer 
According to the UNFCCC website ECOTAWA entered the Vietnamese market at the end of 2007. At that time Vietnam already knew several well establish CDM consultancy firms. We wonder why the project owner of a project with such high financial requirements signed a contract with a project developer that had just entered the market. ECOTAWA had no experience in Vietnam at that time. At the end of 2007 ECOTAWA did not have any project registered in Vietnam or even under validation. We therefore assume that this project was rejected by other CDM developers in Vietnam with knowledge and a good reputation. ECOTAWA, new and eager to enter the Vietnamese market may still have been willing to accept the risks. 

*Impact
The PDD only states the impact defined in the Environmental Impact Analysis, which was conducted prior to the start of the project. It does not clearly specify the impact of the project on the population and environment. The PDD states that a study was conducted based on the World Commission on Dams guidelines. This study is not publicly available. The PDD does not describe any of the findings of this study. This should be further elaborated in the PDD and the compliance of the project with all requirements of the World Commission on Dams guidelines should be carefully validated by the DOE.

The PDD does specify that state-owned companies are mainly confined to construct large scale hydropower projects. Thus at least one guideline (the full analysis of alternatives and options) was not met. The only option considered was a large scale hydropower project based on the survey prepared by EVN.

We hope that the EB and the validator of this project will take our remarks into consideration and look forward to the hearing the response.

You’re truly,
Ts. Nguyễn Đức Quang
Trần Thị Bảo Châu