IFI governance


Bank replicates past hydropower mistakes?

2 July 2007

versión en español

Concerns raised about the Nam Theun 2 dam in Lao PDR, the Bujagali dam in Uganda and the Inga dam in the Democratic Republic of the Congo (DRC) suggest that the Bank may be replicating past mistakes in the flagship projects of its new generation of ‘high-risk high-reward’ hydropower (see Update 53).

In an update on the Nam Theun 2 dam (see Update 45), the World Bank and Asian Development Bank (ADB) refer to the next 12 months as a “vital phase” before the reservoir is filled in June 2008, saying that “satisfactory progress” is being made on environmental and social mitigation measures.

A May report by NGO International Rivers Network, based on a site visit in March 2007, warns however that the “model hydropower project is dangerously close to becoming a replica of past dam mistakes”. They have found that: livelihood restoration programmes are in jeopardy in all project affected areas; the government and the power company are backtracking on commitments to ensure biomass clearance from the reservoir area and guarantee villagers’ rights to their forest resources; and the power company has failed to disclose resettlement plans, in violation of World Bank and ADB policies.

World Bank backing to the tune of $360 million in loans and guarantees for Uganda’s controversial Bujagali dam was finally approved in April (see Update 55). A month later the Inspection Panel was given the go-ahead by the board to investigate environmental, economic and social concerns raised by the Ugandan National Association of Professional Environmentalists (NAPE) and other local organisations. In June, the Ugandan government fronted $100 million to Italian construction firm Salini so construction could begin immediately, despite the fact that other funders said they would wait for the outcome of the Inspection Panel’s findings.

Recent letters from Congolese NGOs to the Bank’s board unsuccessfully urged them to consider the environmental and social legacy of the Inga 1 and 2 dams in the DRC before approving financing for the dams’ rehabilitation or further hydro developments at Inga (see Update 53). The Bank approved a $297 million loan in May for the Regional and Domestic Power Markets Development Project. The NGOs have asked that the Bank conduct further studies on the high levels of heavy metals identified in water samples from the Inga reservoir, and reclassify the project accordingly. They also question the ability of the government to manage the revenues for poverty reduction due to rampant corruption and a lack of fiscal transparency.