(Environmental Finance, London) — JPMorgan Chase has come under pressure to refuse to provide a loan for the controversial Gilgel Gibe III hydropower dam in Ethiopia.
Three NGOs – Campagna per la Riforma della Banca Mondiale in Italy, Les Amis de la Terre in France and International Rivers in the US – have written to the US bank to urge it to refuse a $400 million commercial loan request from the Ethiopian government in connection with the project, which they say would violate the bank’s environmental policy.
The 1,870MW dam is already under construction by Italian firm Salini, at an estimated cost of €1.4 billion ($2.1 billion), and would be the third stage in a project to dam the Gilgel Gibe River for hydropower. The Italian export credit agency SACE has refused to guarantee the project.
In November last year, the NGOs carried out a fact-finding mission to investigate the proposals, which they say uncovered evidence of environmental, social and legal issues with the dam. Problems raised by the NGOs include:
* Environmental Impact Assessment (EIA): The NGOs state that the EIA – released by SACE – “is wholly inadequate according to international best practice”. In particular, they criticise the EIA for failing to assess the downstream impacts of the dam on the Omo River which will be diverted as part of the project. Although the dam is 13% complete, the project has yet to receive a permit from the country’s environmental protection authority, as required under Ethiopian law, the NGOs say.
* Emissions: The dam will create a 150 kilometer-long reservoir upstream, submerging 500 hectares of agricultural land, 1,500 hectares of riverine forest and 25,000 hectares of deciduous woodland, according to the NGOs. The EIA states that 20.4 million cubic meters of biomass would be left to decompose underwater, which the NGOs say would cause “a significant amount of greenhouse gas [GHG] emissions” from the reservoir. They say no analysis of the GHG emissions from the reservoir has been carried out, which would be in violation of JPMorgan’s requirements under its environmental policy.
* Communities: The EIA reports that 400 households will be displaced, and social and commercial exchange between communities on different sides of the river interrupted. The NGOs allege inadequate consultation, in particular with 275 nomadic households which they say have not been considered for consultation or compensation.
* Questions over the procurement process: Under Ethiopian law and international guidelines, an international tender should have been issued by for the construction of the dam. Instead, the Ethiopian Electric Power Corporation (EEPCo) signed a contract with Salini after direct negotiations.
* Energy exports: The NGOs say that Ethiopia’s infrastructure will not be able to absorb the extra electricity from the dam, suggesting that most will be exported, which they call “a questionable priority” for the country given its development situation.
JPMorgan Chase declined to comment.
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EDITOR’S NOTE
The hundreds of millions of dollars Woyanne is squandering in the Somalia war could have been used to pay for the dam, not to mention schools, health care, clean water supply, etc.