China Bank to Fund Controversial African Dam

International Rivers has confirmed that the Industrial and Commercial Bank of China is backing Ethiopia’s controversial Gibe 3 dam, whose generating equipment is to be provided by the Dongfang Electric Corporation. While speculation has been rife that ICBC would fund the project, the bank has not yet publicly confirmed its role. From the International Rivers press release:

Although ICBC has not publicly announced the loan, an official confirmed September 8 by email that the financial agreement between ICBC and the Ethiopian government was signed in July. The funding undermines ICBC’s efforts to build a global reputation as a socially and environmentally responsible lending institution.

Ethiopia’s Omo River is a lifeline to Lake Turkana in northern Kenya. The 1,870 MW Gibe 3 Dam would shrink the Omo River’s flow into Lake Turkana, devastating the lake and some 300,000 indigenous people who depend on it. Severe degradation of Lake Turkana would intensify tribal conflicts and could destabilize the already volatile area between the Ethiopian, Kenyan, and Sudanese borders.

Ikal Angelei, Chair of Friends of Lake Turkana, said: “ICBC is underwriting the destruction of our peoples. Their funding is a hideous gesture of the destruction Chinese funds can bring to Africa’s poorest communities.”

In August, when ICBC’s eventual decision appeared uncertain, Peter Bosshard of International Rivers described it as “an important test case for the environmental responsibility of China’s overseas lenders”:

As we have documented in eyewitness reports, articles and commentaries, the dam could lead to the collapse of the fragile ecosystems of the Lower Omo Valley and Lake Turkana. No less than 500,000 poor indigenous people depend on these ecosystems for their survival. The dam endangers two World Heritage Sites.

The concerns of affected people and NGOs have meanwhile been confirmed by official studies. A review of the project’s impacts on Lake Turkana commissioned by the African Development Bank states: “Lake Turkana is dependant on the Omo River for almost 90% of its inflow. The river is the lake’s umbilical cord. If the Omo River inflow is cut, the lake level will fall. (…) The filling of the dam has the potential to dry up Ferguson’s Gulf, the most productive fishing area of the lake.”

With increasingly unreliable rainfall in the area, competition over dwindling water resources has already led to bloodshed. From In These Times:

For hundreds of years, the Turkana have herded cattle, sheep and goats. They are among the most nomadic people in the world, constantly moving in search of pasture for their livestock. But the changing climate and marginalization by successive governments have caused resources to dwindle at a startling rate across the Turkana’s traditional home.

“It was easier before,” says Loochi’s father Akadaye as he holds a protective palm over Loochi’s damaged eye. “We used to have dry periods, but the rains did eventually come. But now it just goes on and on.” Droughts that once appeared every decade have started ravaging the land every two or three years, throwing the tribe’s migratory patterns into disarray …

“Earlier you would possibly find a handful of tribe members quarrelling over a water source, making a lot of noise and threatening each other with spears,” says the head of Nasinuono village, who goes by the name “Chief” and also works as a coordinator for the African Medical and Research Foundation (AMREF). “But now”—Chief pauses, his eyes widen and he brandishes an imaginary gun—”bloodshed. There is no water, just blood.” …

The United Nations estimates that 400 people have died in Kenya as a result of cattle rustling and water skirmishes in the past year. The Kenyan government has made several attempts to disarm the tribes, but is often accused of being heavy-handed and short-sighted.

The potential benefits of dam development for parched regions of Africa should not be overlooked. In May, China Dialogue carried an interview with Australian engineer Graeme Kelleher under the heading “In defence of dams.” Kelleher highlighted the enormous magnifying effect dams can have on the capacity of natural water resources to support human populations:

Without dams along the Murray-Darling [in south-eastern Australia] for instance, no more than around 200,000 people could be supported. At present, with the dams, it supports the two million people who live there and provides food for 40 million people through export. Without the dams, because of Australia’s climate, you might have no river flow for two years and it wouldn’t even support 200,000. The people would have to migrate to the coast, as the aboriginals did.

Even in Australia, though, hydro projects have been complicated in the past by state borders. In Africa, while the plans of individual governments may be limited in scope to their own territories, their consequences are not; Bosshard notes that Ethiopia’s use of the Gibe 3 dam for irrigation as well as hydroelectricity would exacerbate the damage across the downstream border in Kenya.

Kelleher stresses that dam construction must be sensitive to local ecological and social impacts, and credits China with domestic improvement on this score since the completion of the Three Gorges Dam. However, some Chinese companies have shown a propensity for involvement abroad in projects deemed untouchable by Western export credit agencies, as well as by other Chinese firms. From International Rivers, again:

Sinohydro and China Exim Bank, the leading Chinese actors in this field, don’t want to become rogue actors on the international market, but are eager to be seen as good global citizens. In contrast, smaller companies often don’t care about their reputation. And new actors in the global hydropower market, such as ICBC, may not be fully aware of the problems that projects like Gibe 3 will create, and the public opposition that they will soon face.

* Read more background on the Gibe 3 dam via BBC.
* Listen to a CDT podcast interview with Peter Bosshard about China’s dam projects in Africa here.

September 30, 2010 8:45 AM
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