ENVIRONMENT: Bio Bio dams to be focus of World Bank visit to Chile

By Pratap Chatterjee Reprint | | Print |

Pratap Chatterjee

WASHINGTON, Nov 9 1995 (IPS) - Two major dams on the Bio Bio river in Chile — one under construction and another on the drawing boards — will be the focus of a World Bank mission that is flying to Santiago this weekend.

The team from the International Finance Corporation — Bank affiliate that supports the private sector in developing countries — will be visiting the Bio Bio on a routine mission to look at the Pangue dam, which is currently being built with the help of an IFC loan.

Chilean officials are now planning to construct yet another dam — the Ralco — on the Bio Bio. The IFC mission insists that it has no plans to get involved with the second dam, but it looks like it may have no choice.

The Bio Bio, which descends some 1100 metres from the Cordillera in the Andes to the town of Concepcion on the Pacific Ocean, is one of South America’s most spectacular rivers, with breathtaking gorges and towering waterfalls amid the native forest of the Andes.

Chilean officials have proposed that the private company that is building the Pangue dam should also participate in the proposed Ralco project, which is seven times larger than Pangue, because they are part of the same hydro-electric scheme.

The Ralco dam will be the second and largest of a six-dam scheme on the Bio Bio. It is projected to yield 2900 megawatts of electricity when completed.

The IFC acquired a 2.5 percent stake in the private company that is building the Pangue three years ago. In addition, the IFC made a 70-million dollar-loan to Endesa, the private utility that will sell the power generated by the dam.

The IFC has already been criticised for financing the 113-metre- high Pangue dam located 550 kilometres south of Santiago.

The National Ecological Action Network, the Chilean Commission of Human Rights, the Institute for Ecological Policy, the Committee in Defense of Flora and Fauna, the Centre for Alternative Development and the Mapuche-Pehuenche Centre all strongly opposed the scheme since before its approval in 1992.

“The dams will devastate a region world famous for its ecological wealth and beauty, destroy the Mapuche-Pehuenche culture and steal forever this national cultural and environmental treasure from our children,” the groups said in a joint 1992 declaration.

This week Juan Pablo Orrego and Christian Opasa, two activists with Grupo Accion por el Bio Bio, came to Washington to tell the IFC that things are not going well at the dam site.

They cited, for example, Endesa’s promise to give 0.3 percent of its net profits from the sale of the electricity — roughly 120,000 dollars a year — to a foundation for the indigenous people.

“This foundation is controlled by four company officials. Of the three indigenous people at the foundation, only one actually represents half of one of the three communities in the area,” Orrego told IPS.

Dennis Koromzay, an investment officer at the IFC who is in charge of the loan for Pangue, says that the IFC has commissioned an independent report on the foundation that should be ready by the end of the year.

But Orrego points out that if the company cannot be trusted to turn over such a small amount of money to the local people then the situation with the larger Ralco dam could be far more serious.

For example, the 35-kilometre-long lake to be created by the 155-metre high dam will flood the lands of the Ralco Le Poy, an indigenous community, that lives near the river. No communities were flooded during the construction of the Pangue dam.

Badly planned development in the region has already lead to the extinction of the long-eared Andean deer and the miniature deer, say the activists.

The environmentalists worry that construction of more dams could threaten some 14 species of fish and amphibians endemic to the region, including the Andean condor and slender-billed parakeet, as well as numerous mammals such as the puma.

“When the IFC gave money for the Pangue, the government told us that Ralco would not be built. But now we discover that they purposely designed it with two large turbines that will only work in the winter if there is another dam upstream,” said Orrego.

“The IFC has become an accomplice in this scheme. It gave international legitimacy to this lie,” he added.

“The IFC should stop disbursements for Pangue dam until the local people are allowed to have a proper say in the foundation. And the amount of money that is given to the foundation should be increased to at least one percent,” he told IPS, adding that plans for Ralco should be shelved altogether.

But, by its own admission, the IFC may be committed through its own investment in Endesa.

“All the conditions that were attached to the loan have been satisfied,” Koromzey told IPS. “We have no plans to fund Ralco nor have we been asked, although if the Pangue authorities do get involved we will become part of the scheme because of our stake in the company,” he added.