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World Bank Clears Congo’s Controversial Dam Project

WASHINGTON, Mar 21 2014 (IPS) - The World Bank Thursday approved a 73.1-million-dollar grant in support of a controversial giant dam project in the Democratic Republic of the Congo (DRC).

With another 33.4 million dollars approved by the African Development Bank late last year, the grant, which is being provided by the Bank’s soft-loan affiliate, the International Development Association (IDA), will be used to help establish the legal framework and state authority that will oversee the dam’s construction and operations.

“If leaders of emerging economies are truly interested in the welfare of their citizens, they are better off laying grand visions of mega-dams aside.” -- Atif Ansar

It will also finance a number of environmental and social assessments to shape the development of the multi-billion dollar Inga 3 Basse Chute (BC) dam project.

“By being involved in the development of Inga 3 BC from an early stage we can help ensure that its development is done right so it can be a game changer by providing electricity to millions of people and powering commerce and industry,” said Makhtar Diop, the Bank’s vice president for Africa.

“Supporting transformative projects that expand people’s access to electricity is central to achieving the World Bank Group’s twin goals of helping to end extreme poverty and boosting shared prosperity,” he added.

But the Bank’s support for the project drew criticism from some environmental and civil-society groups that have long opposed a project that is expected to cost at least 14 billion dollars.

“By approving Inga 3, the World Bank shows it has not learnt lessons from the bad experience of previous dams on the Congo River despite its claims to the contrary,” according to Rudo Sanyanga, Africa Director of the California-based International Rivers (IR).

“The Bank is turning a blind eye to the DRC’s poor governance and is taking short-cuts to the environmental assessment of the project,” he added.

That view was echoed by Maurice Carney, executive director of the Friends of the Congo, a Washington-based organisation with ties to community and environmental groups in the DRC.

“We see this decision as consistent with past World Bank projects that wind up as white elephants,” he told IPS. “There are a number of other alternatives for developing the DRC’s enormous energy capacity, including solar, wind, smaller-scale hydro and biofuel.

“The project is being presented as if it will help the population, but more often than not, these big dam projects end up serving industry at the expense of local communities many of which will be displaced once Inga 3 is fully developed.”

As currently envisioned, the Inga III dam would be the first in a series of hydroelectric installations along the Congo River, collectively referred to as the Grand Inga project. This would include a single 145-metre dam, which would flood an area known as the BundiValley, home to around 30,000 people.

The full project could provide up to 40,000 megawatts of electricity, a power potential that has been eyed hungrily by the rest of the continent for decades.  The DRC’s total hydropower potential is estimated to be the third largest in the world after China and Russia.

While DRC’s chaotic governance, however, has stymied forward progress on the project for years, the Grand Inga vision received an important boost last year when the South African government agreed to purchase a substantial amount of power produced by Inga III.

The dam is now supposed to be built by 2020 and, according to Congolese government estimates from November, would produce around 4,800 MW of electricity. Of this, 2,500 MW would go to South Africa while another 1,300 MW would be earmarked for use by mines and related industry in the province of Katanga.

Construction is scheduled to begin by 2016. The Bank will rely heavily on its private-arm facility, the International Finance Corporation, to help DRC’s government establish an autonomous Inga Development Authority which will, among other things, be charged with deciding on construction bids and negotiating purchasing deals for the electricity generated by the dam.

According to Peter Bosshard, IR’s director, the selection of the contractor to build the dam could prove problematic.

He told IPS three consortia are currently in the running: SinoHydro and China Three Gorges Corporation from China, a Canadian-Korean consortium, and a third made up primarily of Spanish companies.

But one of the Canadian companies involved has been barred from receiving any support from by the Bank for past corruption, while SinoHydro has been suspended pending the outcome of a corruption investigation by the Bank, according to Bosshart.

“This means that, unless the DRC government picks the Spanish consortium, it won’t be able to get any World Bank Group loans for the actual construction,” he noted.

That could be a problem. According to Bernard Sheahan, the IFC’s director of infrastructure and natural resources, “the level of investment for Inga 3 BC is so high that neither the public sector nor the private sector alone could finance the full cost of development of the project.”

Huge hydro-electric dams have long been a controversial issue at the Bank which, for most of its history, was an enthusiastic supporter.

Protests by local communities and international human rights and environmental groups that documented the massive displacements and environmental damage these mega-dams often caused – not to mention their failure to deliver electricity to those most in need – resulted in a halt in approving new projects in the mid-1990s.

Indeed, while the 50-year-old Inga 1 and 2 dams were supposed to provide power to much of the country, only ten percent of DRC households have electricity.

Earlier this year, the U.S. Congress passed a landmark new law requiring the U.S. Treasury, which represents Washington on the Bank’s board, to vote against multilateral funding for large-scale hydro-electric projects in developing countries.

The U.S. representative abstained on the vote Thursday, according to knowledgeable sources.

Earlier this month, four researchers at Oxford Unversity Said Business School released a major study based on data from 245 large dams built since 1934 in 65 different countries.

It found that they suffered average cost overruns of more than 90 percent and delays of nearly 50 percent inflicting huge additional costs in inflation and debt service for the mostly public entities that built them.

“Proponents of mega-dams tend to focus on rare stories of success in order to get their pet projects approved,” said Atif Ansar, one of the Oxford researchers. “If leaders of emerging economies are truly interested in the welfare of their citizens, they are better off laying grand visions of mega-dams aside.”

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