Investors Urged to Withdraw Support for Controversial Ethiopian Dam Project

People protest against the Gibe 3 dam project in Ethiopia. The dam is the most descructive dam being constructed at present, according to Terri Hathaway of International Rivers. Photo by: International Rivers / CC BY NC-SA International RiversCC BY NC-SA

Development banks and other investors should distance themselves from a controversial power development project planned by the Ethiopian government and instead fund energy initiatives that are less destructive to the country’s economy and society, a representative of a non-governmental organization said.

The Gibe 3 Dam is the “most destructive dam” being constructed at present, according to Terri Hathaway, the African campaigner for International Rivers. She adds that the project also violates international procurement standards.

Hathaway lauded the African Development Bank and European Investment Bank for officially withdrawing plans to fund the project. EIB abandoned the project in July, saying that the Ethiopian government had found alternative sources of financing, as Devex reported.

But at least one development bank and two countries as still considering supporting the project, Hathaway points out. She says the World Bank is open to giving project guarantees to the initiative, even as it has indefinitely halted negotiations with the Ethiopian government.

Hathaway says the World Bank told NGOs it would not consider any financing for the project at the moment.

“If tempers calm down, could the Bank jump back in, undermining its development goals and policies?” Hathaway asks.

The campaigner notes that the Ethiopian government is also in talks with Chinese companies and banks as well as the Italian government for possible financing for the project. Ethiopia has awarded a subcontract to a Chinese company and is looking to the Industrial and Commercial Bank of China, the Asian country’s largest bank, to provide USD425 million, or 85 percent, of the USD500 million subcontract, Hathaway says. Meanwhile, Italy remains undecided on whether or not it will grant a USD318 million project loan for the initiative, Hathaway says.

Aside from its social and economic impacts, the Gibe 3 dam project is controversial because it was awarded to the Italy-based, no-bid construction company, Salini. This action is in violation of international procurement standards, Hathaway explains.

“ICBC, Italy and World Bank should focus their investments away from Gibe 3 to power development projects in Ethiopia that won’t cause widespread harm. But, even if these loans are approved, there’s still a gap of at least $600 million, not to mention cost overruns. What other banks is the Ethiopian government going to chase?” Hathaway argues.

About the author

  • Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.