Leaky logic: dams in three countries questioned

1 April 2008

By Soren Ambrose, Bank Information Centre and Lucy Baker, Bretton Woods Project

Recent reports have raised new questions about the impacts of World Bank-funded dams in Uganda and Lao PDR, while in Mozambique the World Bank will likely be approached to fund another controversial project likely to be spearheaded by China.

The 250 megawatt Bujagali dam (see Updates 59, 56) is the subject of two investigations – one by the World Bank Inspection Panel and the other by the African Development Bank’s counterpart – following claims by the Ugandan NGO National Association of Professional Environmentalists.

the Mphanda Nkuwa dam would nullify years of work to restore the fragile Zambezi delta region

According to the World Bank and other project stakeholders, “financial closure” for Bujagali was achieved in December, which began construction in August 2007. In total the Bank is lending $130 million from the International Finance Corporation (IFC) to the dam-building consortium, and $115 million each from the international Development Association (IDA) and Multilateral Investment Guarantee Agency (MIGA) in risk guarantees.

A key concern about the dam which is denied by project proponents, is its potential impact on nearby Lake Victoria, Africa’s largest lake. A new report published in Wetlands Ecology and Management finds that smaller dams near the Bujagali site have used far more water than expected and caused the lake’s level to decrease by at least two metres over a six-year period. This has dried papyrus wetlands adjacent to the lake which are key to the area’s ecology and devastated its stock of tilapia fish, a main source of food and commercial income for lake communities.

In Lao PDR implementation of the Bank-supported Nam Theun 2 dam (see Update 56) has reached a critical juncture. The recent Nam Theun 2 trip report and project update by NGO International Rivers (IR) states that the reservoir will be filled in just a few months, yet social and environmental programmes continue to lag behind.

In light of the increased frequency and intensity of flooding in the Zambezi River Valley in Mozambique, the location of the long-planned Mphanda Nkuwa dam, the government is now recommending that 100,000 of the evacuees who were forced out of the valley in January and February re-locate permanently to the areas where they have been resettled. Mozambican president Armando Guebuza has declared not only that the 1,350 megawatt dam “will not put the environment in any danger,” but also that it will help forestall flooding. His government continues to seek financing for the project which will supply energy mostly to South Africa rather than the 95 per cent of Mozambique’s population without electricity. Though China is expected to provide the bulk of the financing, the World Bank is anticipating a request for partial funding- as discussed in Mozambique’s letter of intent to the IMF in January- or at least to certify that environmental standards are being upheld.

Advocacy groups like the Mozambican NGO Justiça Ambiental warn that Mphanda Nkuwa would nullify years of work to restore the fragile Zambezi delta region, which has been devastated by the even larger Cahora Bassa dam.

Having met with local villagers and reviewed project documents during a visit to Lao PDR in November 2007, IR notes that the resettlement of villagers on the Nakai Plateau and the implementation of livelihood restoration programmes are critically behind schedule. In addition, “downstream the $16 million budget and proposed compensation and mitigation measures are inadequate to deal with the scale and severity of NT2’s impacts on communities in the Xe Bang Fai area”. A proposed biomass clearance programme has been cautiously welcomed, though it will likely be insufficient to solve water quality problems. At end February the World Bank admitted to some of these problems in an interim report and added new requirements for the government of Lao PDR and the NT2 power company to comply with. However IR argues that despite this and numerous monitoring missions, the Bank has not taken strong enough stances to correct critical problems.