Monday, July 19, 2010

EIB Halts Funding of Gibe III Dam Studies in Ethiopia

EIB Halts Funding of Gibe III Dam Studies in Ethiopia

San Francisco Chronicle, Sunday, July 18, 2010

July 19 (Bloomberg) -- The European Investment Bank said it has stopped
funding environmental and social impact studies for the Gibe III
hydroelectric dam project in Ethiopia.

The Luxembourg-based bank made the decision after alternative funding
was found, the EIB said in an e-mailed statement today. In the past, the
bank has funded preliminary studies designed to help a group of donors
determine whether to finance dam-building, the lender said.

The EIB stopped funding the studies due to the alternative financing and
not because of the "results of these preliminary studies," it said.

A Kenyan conservation organization, Friends of Lake Turkana, on June 14
filed a court case against the government and Kenya Power & Lighting
Ltd., arguing that environmental and social concerns had been
disregarded when they decided to buy power from Gibe III.

Residents and pastoral communities living along the Omo River, where the
dam is situated, and at Kenya's Lake Turkana, which the Omo River flows
into, will face water shortages, harming fishing and farming, the
organization said.

Other conservation groups, including London-based Survival International
and International Rivers, based in California, have called on the
African Development Bank, the European Investment Bank, JPMorgan Chase &
Co. and other financiers not to fund the 1.5 billion-euro ($1.95
billion) Gibe III project.

Italy's Salini Costruttori SpA is working on the dam with financing from
the Ethiopian government. Once completed, the 243-meter-high (797
feet-high) dam will generate 1,870 megawatts of electricity, more than
doubling Ethiopia's current power capacity, according to the Ethiopian
Electric Power Corp.

--Editors: Alastair Reed, Philip Sanders.

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