ENVIRONMENT: Hydroelectricity, Unpopular and Uneconomic

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Feb 26 1998 (IPS) - The hydroelectricity construction business is facing greater controversy and smaller profits each day, to the extent that two environmental organisations have suggested the Swiss Asea Brown Boveri (ABB) company go into a new line.

A study ordered by the ecologist groups Bern Declaration and the Swedish Society for Nature Conservation (SSNC) advised ABB to dedicate its expertise to other renewable energy sources.

The hydroelectricity industry is already facing an uncertain future, and the financial crisis in Southeast Asia could add to the threat to ABB, according to the research presented in Zurich Wednesday.

ABB executive president, Gioran Lindahl, Thursday confirmed he had received the report but “we have still not had time to analyse it,” he said.

Lindahl was chairing the presentation of the company’s annual budget in Wettingen. The company employs 213,057 workers world- wide and works with precision tools and high technology as well as hydroelectricity.

The report from the environmental organisations, written by Nicholas Hildyard, of Eco-Asia Consultants, came to the conclusion that ABB’s hydroelectricity businesss had started to lose money and credibility.

The negative tendency was due to the suspension on ABB’s contract for the Bakun dam in Malaysia, the biggest deal ever obtained by the company.

Losing the Bakun contract, coupled with the Asian crisis, has psychologically and strategically affected the Swiss-Swedish transnational, said Hildyard in a press conference.

The financial report presented by Lindhal showed profits of 572 million dollars for 1997, 54 percent lower than the 1.233 billion obtained in 1996.

ABB’s business was worth a total of 31.265 billion dollars, down seven percent on the previous year.

The company losses include 102 million dollars in terms of costs for the Bakun hydroelectric dam in Malaysia, which is currently at a standstill.

ABB’s report, which will be presented to shareholders on April 2, stated that contrary to the ecologists claims and despite short term uncertainty, Asia still presented them with some significant potential growth possibilities.

The environmentalists said a study of the performance of the hydroelectric sector showed this industry has only mediocre perspectives, which contradict the ABB group strategy as a high growth latest technology company.

Peter Bosshard, Bern Declaration secretary said his organisation and SSNC had “asked ABB to seriously reconsider its continued participation in hydroenergy.”

“We recommended they transfer their interest from hydroenergy to renewable energy,” said Goran Eklof, of SSNC. The study suggested the Swiss company concentrate on solar and wind power.

Apart from Bakun, the ABB company also took part in other monumental Asian dams like the Three Gorges and Maheshwar.

The hydroelectric industry outlook barely expects annual growth of four percent for the period of 1990 to 2020, far lower than other energy producers and in resounding contrast to the renewable sources, which are growing by between 10 and 20 percent.

Another negative facet for the hydroelectric industry is the increase in public opposition. The harshest criticisms have been raised against the displacement of local people due to the construction of the monster dams.

The study, which was also backed by Greenpeace Switzerland, estimated between 30 and 60 million people have been displaced by these works worldwide.

The industry was also hit by the reduction of political support and development aid for such projects world-wide.

John Fox, ABB’s press representative, said Lindahl is member of an international group working on the evaluation of the problem along with business people, the financial institutions and the people directly affected by the dams.

The World Bank, one of the main funders of the centres, showed skepticism over the outlook for the sector.

Between 1970 and 1985, the bank funded an average of 26 dams per year. In the present decade, this number fell to barely four.

The Bern Declaration and SSNC report stressed the industry was having difficultly in the energy market, which is an increasingly competitive environment.

And private investors are reluctant to fund hydroelectric projects as they judge it a high risk and profitless activity.