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.”

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. Credit: alaindg/GNU license

By Carey L. Biron
WASHINGTON, Feb 11 2014 (IPS)

Watchdog groups here are warning that a deal has been struck that would see Chinese investors fund a massive, contentious dam on the Congo River, the first phase of a project that could eventually be the largest hydroelectric project in the world.

Discussions around the Inga III dam proposal, in the Democratic Republic of Congo (DRC), have been taking place in some form for decades. They have picked up speed over the past year, however, under the auspices of the World Bank, the Washington-based development funder.“Handing the project over to a private investor will make it even less likely the country’s poor people would benefit from the project.” -- Peter Bosshard

On Tuesday, the bank’s board of directors were to have voted on an initial 73-million-dollar loan for the project, to be offered through the International Development Association (IDA), the institution’s programme for the world’s poorest countries. Last week, however, that vote was abruptly postponed.

Now, civil society groups are reporting that the project may be going forward instead under the World Bank’s private-sector arm, the International Finance Corporation (IFC), with the backing of Chinese investors. Yet critics, who have long worried about the local social and environmental impact of the Inga project, worry that greater involvement by the private sector will result in skewed prioritisation of beneficiaries.

“Handing the project over to a private investor will make it even less likely the country’s poor people would benefit from the project,” Peter Bosshard, policy director for International Rivers, an advocacy group, said Monday.

“The IFC deal was arranged behind closed doors without any accountability to the DRC parliament, the World Bank’s board of directors, or civil society … Non-transparent deals such as the Inga 3 Dam are the best recipe for deepening corruption in the DRC. They will not strengthen the public accountability that is necessary for social and economic development.”

Citing multiple sources within the bank, Bosshard says the decision to change the Inga III funding modality appears to have been made between high-level officials from the World Bank, the IFC and USAID, the U.S. government’s main foreign-aid arm, reportedly bypassing the bank’s board of directors. Thus far, none of these institutions have publicly confirmed any deal.

“The World Bank Group is fully committed to supporting the Inga III hydropower project, which has the potential to improve the lives of millions of Africans,” a bank spokesperson told IPS in a statement. “We postponed presenting to our Board a Technical Assistance package related to the design of the project’s operation, but the project has not been cancelled, and our commitment to Inga III is unchanged.”

Primary beneficiaries

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 Bundi Valley, 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. While DRC’s chaotic governance 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 12-billion-dollar 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.

“There is little indication that the dam development schemes underway would address the issue of access to electricity for the population at-large; industrial users stand to be the primary beneficiaries,” Maurice Carney, executive director of Friends of the Congo, an advocacy group here, told IPS.

“Only 10 percent of Congo’s population has access to electricity and the situation is even worse for rural population, where only 1 percent has access to electricity. For a country like the DRC that is endowed with a plethora of alternative energy options, smaller-scale renewable energy technologies would be the best way forward.”

Carney and others are calling for a cumulative assessment of the Grand Inga scheme, to include study of all social and environmental impacts. Indeed, these have been longstanding concerns, but now some development advocates worry that greater private sector involvement in the Inga III project will further exacerbate such issues.

“We have questions about whether the scheme can deliver any development at all in the hands of the private sector,” Joshua Klemm, manager of the Africa programme at the Bank Information Center, a watchdog group here that focuses on the World Bank, told IPS.

“For good or bad, if this project belongs to the Congolese government, there’s at least some hope to expand electricity access in the country. That would go out the window if we’re talking about a purely private sector project.”

Duelling U.S. stances

As the Inga III project picked up momentum in recent months, USAID too expressed its interest in the proposal. The agency’s administrator, Rajiv Shah, visited the Inga III dam site in mid-December, and stated that the proposal could be added to a new, large-scale initiative by the United States to significantly increase electrification across Africa.

Although USAID was unable to comment for this story by deadline, any involvement by the agency in brokering a deal with the IFC would be interesting. Just last month, the U.S. Congress passed a landmark new law requiring the U.S. Treasury to formally vote against multilateral funding for large-scale hydroelectric projects in developing countries.

The new provisions, contained in a huge appropriations bill funding the federal government, impact both on bilateral U.S. funding through agencies such as USAID, as well as on the significant contributions that the United States provides to multilateral development institutions, particularly the World Bank. (The U.S. Treasury was unable to comment by deadline.)

“Under the [appropriations] language, the United States will have to oppose the Inga III dam at the IFC as much as it would have had to do this if it were an IDA project,” International Rivers’ Bosshard told IPS. “There’s no difference there, but it is ironic that the USAID administrator would have pushed the deal.”