Q&A with AfDB on large dams

http://www.waterpowermagazine.com/story.asp?sectioncode=46&storyCode=2060830

Q&A with the African Development Bank

05 October 2011

Roger M Gaillard, a lead specialist with the African Development Bank's Energy, Environment and Climate Change Department, gives an an insight into the bank's funding of hydro projects and dams across Africa

IWP&DC: Could you give a quick overview of African Development Bank (AfDB) funding for hydropower and dam projects across the region.

Roger Gaillard: In the last five years, the total amount provided by the bank for hydropower and dam projects is in the range of US$300M. The capital cost of these projects is actually three to four times larger thanks to the leveraging of other donors, government contributions and private investors shares. The regions/countries that have benefited the most are Western Africa, the Niger Basin, Uganda, Sierra Leone, and Madagascar.

The major part of this funding was devoted to new projects. Refurbishment efforts remained modest with the Massingir dam rehabilitation project in Mozambique.

Is the bank focusing more on funding for refurbishment as opposed to new projects?

The bank provides funding for both refurbishment and new projects that meet its social and environmental standards. Africa has tapped only a small fraction (4%) of its hydropower potential (estimated at 1750TWh), so the scope for new projects is large. The challenge remains that much of Africa's energy potential is far from the urban centres where it is most needed. Regional energy schemes that encourage the creation of regional markets will be important.

Are there certain countries that have received more funding over the past five years? If so, why?

Obviously the activities and efforts of the bank to support hydropower projects are concentrated in areas where there are large river basins with untapped potential for hydropower such as the Fouta Djalon in West Africa, Zambezi and Nile river basins, Congo river basin, Niger river basin, Cameroon, Ethiopia, etc.

Overall, the African Development Bank Group's mission is to help reduce poverty, improve living conditions for Africans and mobilise resources for the continent's economic and social development. With this objective in mind, the institution aims at assisting African countries – individually and collectively - in their efforts to achieve sustainable economic development and social progress.

Like other development banks, the AfDB promotes the investment of public and private capital in projects and programmes that are likely to contribute to the economic development of its stakeholders. The bank therefore finances projects run either by the government or the private sector.

The AfDB works with each borrowing regional member country to define a medium- to long-term development strategy and operational programme in a document called a country strategy paper. The paper considers performance and results, is aligned to the country's own development plan and poverty reduction goals, and its preparation or planning cycle. This assessment and planning document guides much of the work in each country. In addition, sector strategies guide overall priorities in their respective sectors.

In 2010, infrastructure made up 71% of the Bank's portfolio of approved projects.

Has bank funding for African hydropower and dam projects increased or declined over the past ten years?

The bank's funding for hydropower and dam projects remained more or less steady during the last ten years. Nevertheless, in recent years, the bank has funded a series of feasibility and detailed studies (the Gambia River Basin Development Project and Inga in the Democratic Republic of Congo are major examples) that will lead to projects worth several billion dollars in investments in the coming years.

Can you give examples of current Bank projects that are live in Africa?

In the Democratic Republic of the Congo, the bank is currently financing a feasibility study of the Inga River to identify the optimal site for hydropower development. The project is significant not only for the DRC but for Africa as a whole, as it has the potential to provide one-third of Africa's current power through clean, low cost energy (up to 40,000MW).

Meanwhile the Bujagali hydroelectric power plant in Uganda will mean fewer blackouts and brownouts and will reduce the need for expensive, polluting back-up generators. The plant is a 250MW run-of-the-river power plant. The project includes upgraded transmission lines and 100km of new lines as well as upgraded and new substations. The total project cost is US$736M. The bank is contributing US$110M towards the power project and US$27M for interconnection.

The OMVG energy programme in West Africa will improve access to electricity in four countries: Senegal, Gambia, Guinea Conakry and Guinea Bissau. It will be the largest integrated hydropower scheme in Western Africa, with two hydropower plants totaling a capacity of 368MW. Approximately 1700km of overhead lines will connect the four countries and later other countries in the region. It is a substantial contribution to a regional energy market. The project includes: two hydropower plants, 15 substations, and 1700km of transmission lines. The total estimated cost is US$1.27B.

In Madagascar, the 15MW Sahanivotry hydropower plant generates 90GWh on average, supplying 10% of the island's electricity. It is privately owned and operated and is Madagascar's first project to earn the right to sell carbon credits through the Clean Development Mechanism. The project cost was US$13M with the African Development Bank providing US$6M.

In Sierra Leone, the Bumbuna hydroelectric project will provide a 50MW hydroelectric power station and a 200km transmission line and associated substations to distribute electricity from Bumbuna to Freetown and nearby villages. The goal is to complete a project begun in 1990 that was interrupted by civil strife. When complete, it is expected to lower the country's annual fuel bill by US$11.5M, thereby reducing Sierra Leone's trade deficit by 5-6%. Completing the project is expected to cost US$57M. The AfDB is contributing a US$16M loan.

The Kandadji project in Niger includes the construction of a 1.6B m3 dam to regulate the flow of the Niger River to provide water for irrigation, water supply and sanitation, etc. The electricity by-product will be a source of revenue. The dam is necessary to help address Niger's recurrent drought. The bank is providing US$62M in loans and grants.

Please give one good case study of a project that the bank has been working on in Africa.

The Bujagali hydroelectic plant is a 250MW project on the White Nile in Uganda. It is located at Bujagali Falls, about 5m from the source of the Nile in Lake Victoria. Uganda's current generation capacity is 283MW. This plant will double its current capacity and bring the price of electricity down from 24 to 11 cents per kWh.

It is also one of the largest private equity investments in the hydropower sector in Africa. As part of the financing arrangement, the AfDB guaranteed the debt provided by the commercial lenders through a partial risk guarantee, effectively protecting lenders from a default by the host country government. This, in combination with other carefully planned and innovative financing arrangements, enabled the deal to go forward and close in just under two years.

As noted above, the project includes upgraded transmission lines and 100km of new lines as well as upgraded and new substations. The total project cost is US$736M. The Bank is contributing US$110M towards the power project and US$27M for the transmission lines, which are being constructed as a separate but linked project.

Construction of the transmission lines is about 80% complete. There is ongoing work to secure the remaining access rights to the transmission corridor. Construction of hydroelectric plant is progressing well.

Looking to the future, is AfDB-funded support for hydro and dam projects likely to increase?

Support for projects will certainly increase, in part as a result of efforts to prepare projects through studies and advisory services and in part due to the increased attractiveness of the renewable energy sector. This is thanks to more adequate concessional financing resources mobilised by the international community for the struggle against climate change.

Africa has 20% of the world's hydropower potential but only uses a small fraction of that capacity. Currently, there is renewed and active global interest in developing that capacity. Demand for electricity in Africa's is expected to grow at about 3.5% per year for the next two decades, meaning electricity consumption will double within the same period. The high price of crude oil continues to have an impact. In addition, there is growing government and public awareness of the potential for green growth to mitigate greenhouse gas emissions and take advantage of new growth opportunities through renewables.

The AfDB is committed to reducing poverty in Africa, and increasing access to energy is a key part of that commitment. Under its forthcoming energy strategy, clean technologies, like hydropower, play a major role. Over the next three years, the AfDB intends to invest more than US$3.5B in improving energy access, with more than a third of it going to renewable energy under its new energy strategy.

The bank has been approached by several of its member countries for funding various hydropower and dam projects in the short term. These projects are at various stages of the bank instruction process, ranging from identification to final appraisal for submission to its board during the coming months.

The most significant projects are:

• The Itezi Tezi 120MW plant in Zambia.

• The 60MW Rusumo Falls multinational project in East Africa.

• Geba project in Ethiopia.

• Félou and Gouina schemes for OMVS in Western Africa.

• Lompangar power plant in Cameroon.

• Boali Scheme in the Central African Republic.

It is worth noting that the evaluation and appraisal activities on these projects will always focus on assuring that they meet the social and environmental standards of the bank prior to the decision to finance.

Roger M. Gaillard can be contacted via email at the African Development Bank: r.gaillard@afdb.org

Myitsone: Implications for China-Burma relations and Burma Rivers Network's response

[Below is a response from Burma Rivers Network to the China Media
interview with
President Lu Qizhou of China Power Investment. The original interview
can be found here:
http://www.chinadaily.com.cn/china/2011-10/03/content_13835493.htm. Also
included is "Analysis: Myanmar dam suspension tests vital China ties" by
Ben Blachard at Reuters]

Analysis: Myanmar dam suspension tests vital China ties

By Ben Blanchard and Aung Hla Tun
Reuters
(http://uk.reuters.com/article/2011/10/04/us-china-myanmar-dam-idUKTRE7926HU20111004)

BEIJING/YANGON | Tue Oct 4, 2011 10:09pm BST

(Reuters) - The surprise decision by Myanmar's new civilian government
to suspend a controversial, Chinese-backed dam is straining relations
between the erstwhile allies, but neither is likely to risk lasting damage.

China is pressing for an "appropriate solution" to the shelving of the
$3.6 billion Myitsone dam, a moved hailed by its opponents who had
warned of the scheme's environmental damage and forced relocation of
residents.

For Myanmar, under wide-reaching sanctions by Western countries for
human rights issues, China is its most important diplomatic and economic
ally.

And for China, the country formerly known as Burma provides access for
its landlocked southwestern provinces to the Indian Ocean. China is
building gas and oil pipelines across Myanmar to avoid the Malacca
Strait choke point.

"Overall the relationship will be there, as the two countries have a
very close relationship economically," said Zheng Yongnian, director of
East Asian Institute at the National University of Singapore.

"Myanmar relies on the Chinese side. Other countries, like India or the
United States, are becoming actors. But China has geopolitical and
economic advantages."

The ruling Communist Party's official newspaper, the People's Daily,
noted that Myanmar's government had said it would talk to China about
the dam project "to avoid damaging bilateral ties and friendship."

China is unlikely to give in easily over the project, which is part of a
broader scheme to build seven dams, the majority of whose power will
feed its booming economy.

The military junta proposed the dam in 2006, and in 2009 contracted
Myanmar's military-backed Asia World Company and China Power Investment
Corp to build it.

The Chinese-state owned firm has expressed shock at the Myanmar
government's decision to suspend the project and warned of legal
consequences.

"Given everything that China Power Investment has put into this project,
it would be unlikely for them to walk away without first sitting down
and pledging to do more environmental impact studies and so on," said
Grace Mang, China Global Programme Coordinator at International Rivers.

"It's still too early to tell, but I don't think it's just as simple as
Myitsone is canceled."

China will likely now worry about another huge investment project it has
in Myanmar, an oil pipeline being built into southwestern China by China
National Petroleum Corp, which says work is continuing.

"The Chinese government is wise enough to handle this issue amicably
with great care after taking into considerations other strategic
interests like their seeking access to the Indian Ocean through us," a
retired senior Myanmar diplomat said, referring to the pipeline and
other rail and road projects.

"In fact, it was a big blunder of them to have made secret deals with
such an illegitimate government for such strategic mega projects," added
the retired diplomat, who asked not to be identified citing the
sensitive nature of the subject.

MUTUAL TRUST, AND SUSPICION

Despite their reputation for being close, the two have deep mutual
suspicions.

China's growing economic role in Myanmar has caused considerable popular
resentment. Myanmar historically has feared being dominated by its much
larger neighbor, while China worries about instability along its vast
borders.

Beijing frets that Myanmar's civilian government may try and cozy up to
the United States, adding to Chinese concerns about being "encircled" by
hostile forces, such as the U.S. military bases in Japan and South Korea.

"I know historically there's been some issues of distrust with China but
in general terms, I guess relations have warmed a lot and Myanmar still
needs quite a bit in terms of trade in terms of gas and oil pipelines in
2013," said Christopher Roberts, a Myanmar expert at Australian National
University, calling the move a gesture to show it was being accountable.

"But from Myanmar's perspective, I suspect something like the suspension
of a dam is not a relationship-breaker like say the suspension of a gas
plant or an oil pipeline. So I think strategically this is something
that wouldn't put a significant dent in the relationship with China."

Economic relations are booming. Bilateral trade rose by more than half
last year to $4.4 billion, and China's investment in Myanmar reached
$12.3 billion, Chinese figures show. There is a strong focus on natural
resources and energy projects.

"China and Hong Kong reached the top of the list of foreign investors
just because of a few giant hydro power, oil and gas pipeline and mining
projects. In fact, China has not invested much in the labor intensive
manufacturing sectors," a senior official from Myanmar's Federation of
Chambers of Commerce said.

"Since the Chinese bring thousands of workers, including manual
laborers, their projects do not benefit local people much," he added,
also asking not to be identified.

Ethnic minorities in Myanmar see the construction of Chinese-built dams
as expanding military presence into their territory. Some analysts say
Kachin rebels may be trying to hold the dams hostage in return for a
share of the revenue from the projects.

The dam decision was a rare rebuke of China by Myanmar, especially as
Beijing has gone out of its way to cultivate the new leadership.

Thein Sein's first major foreign visitor since taking office in February
under Myanmar's "road map" back to democracy and civilian rule was the
Chinese Communist Party's fourth ranked leader, Jia Qinglin.

During a visit to Beijing in May, Thein Sein praised the Chinese as a
trustworthy, selfless ally, and received a line of credit worth 540
million euros.

Ultimately, observers expect Myanmar to compensate China somehow for the
dam, but Beijing would become warier about future projects.

"The moral of the story is I think the Chinese side should now think,
whatever the investments or the projects they'd like to do with Burma,
they should look long-term," said Zaw Oo, director of the Chiang Mai,
Thailand-based Vahu Development Institute.

"They should not consider or conceive any projects just for the sake of
short-term benefits. (The Myitsone project) for the long-run is not
going to be very positive for the development of Myanmar."

(Editing by Jonathan Thatcher)
***
Burma Rivers Network response to China Power Investment Corporation
comments on Myitsone dam, October 4, 2011

http://www.burmariversnetwork.org/resources/publications/13-publications/701-burma-rivers-network-response-to-china-power-investment-corporation-comments-on-myitsone-dam.html

On October 3, Chinese media interviewed Lu Qizhou, the President of
China Power Investment Corporation, about Burma�s Myitsone hydropower
project. Below is a response to key points in the interview by the Burma
Rivers Network.

Lu Qizhou: I also learnt about this through the media and I was totally
astonished. Before this, the Myanmar side never communicated with us in
any way about the "suspension."

BRN: The villagers at the dam site, numerous political and community
organizations, international human rights organizations have attempted
to contact CPI and discuss the concerns about the impacts and process of
the project. Even though CPI never responded to all these attempts at
dialogue, they cannot claim to be unaware of the feeling about this
project by the people of Burma.

It is impossible that CPI could not have been aware that Burma is in the
midst of civil war and that the Irrawaddy-Myitsone dams project is in an
active conflict zone. The armed ethnic group in this area, the Kachin
Independence Organisation, had directly warned the Chinese government
that local people were against the project earlier this year and that
proceeding with the dams could fuel further fighting.
Without national reconciliation and peace, all investments in Burma face
these types of risks.

Lu Qizhou: "Ever since CPI and Myanmar Ministry of Electric Power No. 1
"MOEP (1)" signed the MOU in December 2006, CPI has always followed the
principle of mutual respect, mutual benefit and win-win result"

BRN: Up to now all major investment projects in Burma are negotiated by
Burma�s military government and the main benefit have gone to the
military. Any win-win result has only been for the military and this is
resented by the people of Burma. The lack of transparency by the
military and foreign investors increases this resentment. The role and
share of the Burmese companies should also be disclosed, including the
benefits to Asia World Company and whether military holding companies,
the Union of Myanmar Economic Holdings Ltd. (UMEHL) and the Myanmar
Economic Corporation (MEC), are involved.

Lu Qizhou: We hired topnotch hydropower design institutes, research
institutes, consultancies and authoritative experts in China to carry
out planning, design, specific study, consultation and supervision for
the upstream-Ayeyawady hydropower project.

BRN: The impact assessment jointly carried out by the Chinese Changjiang
Institute and the Burmese BANCA stated very clearly that the Myitsone
dam should be scrapped and that the majority of the local people were
against this project. Why did CPI hire "topnotch" institutes and then
not follow their advice? The original EIA was completed in October 2009
which was only leaked earlier this year. CPI has just released an edited
version of the EIA and dated it March 2010 which has deleted the key
findings and recommendations.

Although it was recommended, the original assessment did not include a
social impact assessment or an assessment of the impacts on the entire
river, particularly downstream.

In the current political context, where there is civil war and where
communities fear retribution by Burma�s military government, assessors
are unable to genuinely access affected communities or collect reliable
data.

Lu Qizhou: In February this year, Myanmar's Prime Minister (Thein Sein)
urged us to accelerate the construction when he inspected the project
site, so the sudden proposal of suspension now is very bewildering.

BRN: Thein Sein should explain his actions if he indeed wanted to
accelerate the project. In addition the Burmese military government
must disclose all agreements signed with CPI so that this is a
transparent process for everyone to see.

Lu Qizhou: the upstream-Ayeyawady hydropower project is located near the
China-Myanmar border, developing hydropower resources here not only can
meet Myanmar's power demand for industrialization, but also can provide
clean energy for China. It is based on this consideration that we
decided to invest in this mutually beneficial and double winning
hydropower project.

BRN: We understand that this is a double winning project for China as it
can receive 90% of the energy from this dam while Burma has to bear all
the social and economic costs.

Lu Qizhou: Myanmar government will gain economic benefits of USD54
billion via taxation, free electricity and share dividends, far more
than CPI's return on investment during our operation period.

BRN: Over the past several years Burma�s military government has
received billions in revenues from the sale of natural gas to Thailand,
yet the country remains impoverished with some of the worst social and
economic indicators in the world. The "economic benefits" therefore do
not reach the broader public and do not contribute to the genuine
development of the country.

Lu Qizhou: As far as I know, in the more than 100-year history of
hydropower development, no flood or destructive earthquake has ever been
caused by dam construction. We are able to ensure the safety of dam
construction.

BRN: Given the increasing frequency and severity of earthquakes, there
cannot be a guarantee of safety. No studies about the safety of the dam
or about disaster preparation have been disclosed to the public.
The world�s worst dam disaster occurred in Henan Province in central
China in 1975. Twenty years after the disaster, details started emerging
that as many as 230,000 people may have died.

Lu Qizhou: It has become a common consensus that hydropower is the only
renewable energy suitable for large-scale development now.

BRN: Rural communities in Burma and Kachin State are utilizing the
appropriate technology of small hydropower to realize their electricity
needs on their own. The Kachin capital of Myitkyina is one of the few
cities in Burma that currently receives 24-hour electricity due to an
existing small hydropower project. Decentralized management and the
right of local people to manage and utilize the electricity generated by
small hydro needs to be promoted in Burma, not large scale projects that
are environmentally destructive and export electricity rather than using
it domestically.

Lu Qizhou: The Myanmar government attaches significant importance to
resettlement for the upstream-Ayeyawady hydropower project, and has
effectively led and organized the planning, design and implementation of
resettlement� According to the agreement, we assisted in the
resettlement work and proactively fulfilled our social responsibilities
and obligations, while fully respecting local religion, ethnic customs
and the wish of migrants.

BRN: Villagers fear for their lives if they complain or resist
relocation at the hands of armed military personnel and have thus been
forced to give up their farmlands, accept inadequate compensation, and
be herded into a relocation camp where there is not enough farmlands and
water for livelihoods. People now either have no jobs or low-wage
temporary jobs and they cannot continue cultural practices linked to
their original homelands. Villagers living in the relocation camp are
restricted in movement and are constantly under military surveillance.

Over 60 villages, approximately 15,000 people, will eventually be
permanently displaced from their homelands due to the Irrawaddy Myitsone
project. This dislocation will cause many secondary social problems
including conflicts over jobs and land, and an increase in migration and
trafficking to neighboring countries. Women will be particularly impacted.

Lu Qizhou: When Myitsone Hydropower Station is completed, it will
effectively control and reduce the flood peak, raise the anti-flooding
standard in downstream area, and reduce life and property losses caused
by downstream flood on people living on both banks.

BRN: Water releases from hydroelectric dams are entirely dependent on
the electricity generating needs of the electricity buyer. In this case,
all seven dams of the Irrawaddy Myitsone project will serve China�s
electricity needs, not the downstream agricultural, transportation or
health needs of Burma. Chinese engineers running the dams will decide
how much water to release downstream according to orders from Beijing,
not Naypidaw. As seen with the Mekong, this can cause unexpected and
devastating water surges and shortages.

Contact:
Ah Nan - +66-848854154
Sai Sai - +66-884154386
Website - www.burmariversnetwork.org

***
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Merowe dam Technical Consultant, Lahmeyer, under investigation

http://www.sudantribune.com/Merowe-dam-Technical-Consultant,40179

Sunday 18 September 2011

Merowe dam Technical Consultant, Lahmeyer, under investigations

September 17, 2011 (LONDON) � Lahmeyer Int, the German consultant is
under investigations with regard to its involvement in Merowe dam
project in Sudan. The Frankfurt Prosecutor Office will investigate the
company involvement, according to Taz, a leading German newspaper.

Merowe dam project, also known as Hamdab dam, is a hydroelectric
project on the River Nile Fourth cataracts. The project was financed
by different Arab funders and Chinese. It was completed in 2010 and
has caused the displacement of more than 100,000 individual from three
riverian communities, hamdab, Amri and the Manasir.

The matter arose last year from a criminal complaint presented by the
European Center of Constitutional and Human Rights (ECCHR). The
attorneys Wolfgang Kaleck and Miriam Saage-Maa� accuse the Corporation
Lahmeyer of coercion and damage of property, inter alia. The
Corporation, based in Bad Vilbel (Germany), is believed to have
violated the right to property, the right to food and the right to
adequate housing.

Ethnologists of the University of Bayreuth, who carried out research
in the area of the Manasir people in northern Sudan and was present
during the flooding, confirmed the accusations. "When the Nil broke
its banks by the end of July 2008 and reached the first village, the
farmers were astounded and shocked." says Valerie H�nsch, who is doing
a doctorate on the relocation of the Manasir people.

According to Frankfurt Prosecutor�s Office/Main, Lahmeyer is supposed
to submit a statement by autumn. After this, the ethnologist H�sch
will be interrogated as a witness.

Ali Askouri, the Chairman of the Council of Merowe Dam Affected People
said "we have exerted tireless efforts over the last four years to get
to this point. We have overcome lengthy, complicated, tedious legal
and other innumerable procedures. We exerted tremendous efforts to
ensure that the role of this company in the destruction of our
community is investigated. We will continue this until justice is done".

Lahmeyer Int. was debarred by the World Bank in 2004 for seven years
after it was indicted and convicted by South African court in 2004
when found guilty of corruption in Lesotho Highlands Water Development
project.

According to Taz, preliminary proceedings like this are rare in
Germany, because German public prosecutors and prosecution services do
not want to assume responsibility for the behavior of domestic
corporations abroad. The judiciary in other states too often allows
corporations from the rich north to do whatever they want to.
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Lesotho water project needs scrutiny

http://www.businessday.co.za/articles/Content.aspx?id=155033

Lesotho water project needs scrutiny

by COLIN HOAG AND LORI POTTINGER

IN AUGUST, SA�s minister of water affairs and Lesotho�s minister of
natural resources signed an official agreement to implement Phase 2 of
the Lesotho Highlands Water Project (LHWP)

Published: 2011/10/04 07:29:42 AM

IN AUGUST, SA�s minister of water affairs and Lesotho�s minister of
natural resources signed an official agreement to implement Phase 2 of
the Lesotho Highlands Water Project (LHWP). It was a momentous
occasion: the construction of Polihali Dam in Lesotho, with its
capacity of 2,2-billion cubic meters, will make the LHWP one of the
largest transboundary water-transfer schemes in the world. The signing
went virtually unnoticed in SA.

The LHWP has been fraught with problems since the treaty was signed in
1986. Phase 1 left thousands of Basotho worse off than before the
project began. While Lesotho was encouraged by the World Bank to
export its "white gold" for poverty alleviation purposes, an internal
World Bank study last year rated the project a failure on this key goal.

But there are good reasons the public should be paying more attention
to this huge development. First, there are better alternatives to
building more huge dams in Lesotho. Moves to increase water supply to
Gauteng should only come after moves to increase the efficiency of
urban water infrastructure. Developing water recycling schemes and
repairing leaking municipal water infrastructure would boost the
economy, provide jobs and spare the mountain valleys of Lesotho � all
at a fraction of the R7,8bn cost of LHWP Phase 2. These and other
demand-side management strategies are also a smarter approach for a
southern Africa that will be drier as a result of climate change.

South Africans should also be sc eptical about Phase 2 because of the
effects on one of the region�s great rivers. Thousands of kilometres
of the Senqu/Orange River, from Lesotho to its mouth at the Atlantic
Ocean, will become water-starved in the name of Gauteng water
consumers. Rivers are the most endangered natural systems on the
planet and climate change will make their overall health even more
precarious. Even with advanced river- modelling and mitigation
programmes, it is difficult to say how downstream areas will react to
drastically reduced flows.

Lesotho�s food security is also at risk, with implications for the
region�s overall prospects. Upstream of the Polihali Dam, thousands of
square kilometres of fertile land will be inundated. According to
estimates by project authorities, more than 20000 Basotho will be
resettled or lose grazing and agricultural fields. While the LHWP is
billed as a development initiative for Lesotho � and indeed it will
bring much-needed infrastructure, hydroelectric power and temporary
employment � many rural Basotho will suffer greatly as a result.
Unless the LHWP brings sustainable economic activity to Lesotho, South
Africans can expect more migration from Lesotho. Recent tightening of
immigration restrictions by South African authorities will mean many
of these migrants will go undocumented.

South Africans should also be concerned about the LHWP�s significance
for regional good governance. Corruption is a major problem on large
dam projects and the LHWP suffered from widespread corruption in Phase
1. Lesotho was lauded for trying and successfully convicting former
LHWP CEO Masupha Sole for accepting bribes from international
contracting companies, and for its dogged pursuit of guilty verdicts
for the companies.

On August 1, however, the Lesotho Highlands Water Commission appointed
the recently paroled Sole as chief technical adviser for the Lesotho
delegation. In such a capacity, Sole will have more administrative
control than he did as CEO, and will oversee several people who
testified against him.

What is more, German company Lahmeyer International, which was found
to have bribed Sole with about R5,9m, was recently removed from the
World Bank�s black list two years early, and is now eligible to bid on
Phase 2 contracts.

Finally, there has been little discussion of the fact that water costs
as calculated by SA�s water boards derive largely from the costs of
water diversion. The South African financing of the LHWP will come
directly from the end user. Activists and policy makers would do well
to integrate their concerns regarding water access with those raised
by the LHWP.

The phrase "water connects" reminds us that we can�t take our water
bonds for granted. The fate of urban SA is linked with its rural
neighbour by water in complex ways that demand public attention:
southern African environmental security, social stability, good
governance and water access are at stake.

� Hoag is a PhD student at the University of California, Santa Cruz.
Pottinger is with International Rivers.
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Zambezi: Batoka dam costs balloon

http://www.financialgazette.co.zw/companies-a-markets/10033-batoka-costs-balloon.html

Batoka costs balloon

Thursday, 29 September 2011 11:07

Shame Makoshori,Senior Business Reporter

A board member with Zimbabwe's state-run power company says the cost
of constructing the 1 650 megawatt (MW) Batoka hydropower station has
doubled from US$2,5 billion when the project was conceived in 1993.

The power project is a joint venture between Zimbabwe and Zambia.
The Batoka power station turbines were expected to start turning in
2001, generating an additional 800 MW for Zimbabwe.
However, lack of funding and reluctance by the Zambian government to
the start the project has delayed its implementation.
ZESA Holdings deputy chairperson, Simba Mangwengwende, who worked for
years as the utility's chief executive officer, told delegates at a
recent mining indaba that fresh studies were imperative to establish
the true cost of completing the project should its promoters decide to
start implementing it.
"The cost of constructing Batoka could have doubled by now," said
Mangwengwende.
"We are still using 1993 estimates. We need to (revise the)
estimates," he said.
Investors at the conference had queried why Zimbabwe had continued to
mourn over power shortages when huge potential was lying unexploited
through several projects, including Batoka.
Construction of the power station was expected to resolve the
country's power shortages which have disrupted the normal functioning
of the country's frail-but-recovering economy.
If the project had been brought to life, joint owners, Zimbabwe and
Zambia, were expected to export surplus power to countries within the
southern African region.
But Zambia, which has shifted goal posts several times, appears to be
committed with power projects in its territory, such as the Kafue
Gorge, which is estimated to cost US$2 billion.
This would mean cash-strapped Zimbabwe, battling blackouts due to
electricity generation constraints largely attributed to lack of
investment in new plants as well as antiquated machinery at existing
plants, would be forced to rope in partners to bankroll the project.
This, however, would require the approval of Zambians with whom it
shares the Zambezi River.
Another option would be granting independent power producers the right
to build and operate the power station on a commercial basis.
"There were misunderstandings between Zimbabwe and Zambia over the
assets at Kariba but this has been resolved. Now that this has been
resolved it is possible for the countries to work together,"
Mangwengwende said.
A senior ZESA official was recently quoted in the local press saying
Zimbabwe needed cooperation from Zambia to implement the project.
"The question of whether we go it alone or not entirely depends on the
Zambians' willingness to join into the venture and I must say that
right now the political differences between the two countries
regarding the project (Kariba) have been resolved. But Zambia can say
that they are unable to raise the requisite financial resources
because they are already engaged in other power projects," said the
official.
The Batoka dam site is on the Zambezi River, about three kilometres
downstream the Mwemba Falls, and 54 km downstream the Victoria Falls.
Misunderstandings over the ownership of the Kariba hydroelectric power
plant, which the two countries share, prompted the Zambian government
to develop cold feet over Batoka in 1994.
"Such a background does not give us a firm foundation to enter into
yet another costly project like the Batoka one," former Zambian energy
minister, Edith Nawakwi, told The Financial Gazette in 1994.
Demand for power had been rising in Zimbabwe since 2009 when new
policies introduced by the inclusive government enabled companies to
resume production.
A recent report by the Ministry of Economic Planning and Investment
Promotion said the mining industry alone had received new investment
proposals worth US$1,7 billion since 2009.
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China Warns of Legal Action Over Myanmar Dam

China Warns of Legal Action Over Myanmar Dam
By Brian Spegele, 4 October 2011
Wall Street Journal
(http://online.wsj.com/article/SB10001424052970203791904576608960074071014.html)

BEIJING�The head of a major Chinese company behind a controversial dam
in Myanmar said the project's suspension by the Myanmar government last
week was a surprise that could prompt legal issues, in the latest sign
of frayed relations between the two countries.

China Power Investment Corp. President Lu Qizhou, in an interview with
the state-run Xinhua news agency on Monday, said halting construction on
the $3.6 billion Myitsone dam project "will lead to a series of legal
issues."

Mr. Lu said he learned about the suspension "through the media and I was
totally astonished."

The comments suggest the dispute could linger even as China seeks
projects in Myanmar, an ally with strategic importance to Beijing,
although it isn't clear how the company would press claims, given the
weak legal systems in both countries. Officials of the two governments
couldn't be reached to comment.

On Sunday, a spokesman for China's foreign ministry said Myanmar's
government should protect the rights of Chinese companies there.

The dam, affecting the Irrawaddy River in Myanmar's north, would have
flooded an area roughly the size of Singapore.

The project has been unpopular. In communities in Myanmar's Kachin
state, guerrilla groups have clashed recently with the country's armed
forces, and the Myitsone dam was viewed by local residents as a way for
the government to resettle ethnic groups.

President Thein Sein on Friday said construction should be suspended,
saying the project was against the will of the people�a decision that
came as a surprise to many observers, given its potential to anger
China, the politically isolated Myanmar government's most important
strategic ally.

China needs the alliance in part because of Myanmar's geographic
closeness with regional rival India and for its access to the Bay of
Bengal. China and Myanmar are building an oil and gas pipeline through
Myanmar and into southwest China, in an effort by Chinese officials to
diversify fuel sources.

The episode suggests Myanmar may be willingness to move out of China's
shadow as it seeks greater favor among Western governments.

A new Myanmar government was put in power last year, in the nation's
first multiparty election in two decades, though foreign governments
widely considered the vote to be a fraud. Myanmar has been trying to
convince foreign leaders it is on a path of democratic reform.

Large infrastructure projects are a common way Beijing looks to win
diplomatic favor in the developing world, and its companies are building
hydroelectric dams in Southeast Asia, Africa, and elsewhere.

In the interview, Mr. Lu defended hydroelectric power, going as far as
to mention the Hoover Dam powering the city of Las Vegas as an example
of the power source's success.

Separately Monday, state-run China National Petroleum Corp. donated
$1.32 million to build schools in regions along its oil and gas
pipelines to China, according to Xinhua.
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Egypt's New Democrats Ready to Defend Nile

http://www.voanews.com/english/news/Egypts-New-Democrats-Ready-to-Defend-Nile-130848308.html

September 30, 2011
Egypt's New Democrats Ready to Defend Nile
If Egypt and Sudan join the Nile water partnership, the decisions the
basin makes will be difficult, and will require new relationships
among those who feed Lake Nasser and those who take from it.

David Arnold

In the beginning, Egypt was the Nile. That could now change, as Egypt,
Sudan and the countries that supply the Nile�s waters face new
politics, economic development, skyrocketing demographics and climate
change. Egypt confronts at least a half a dozen other African
countries that have for generations delivered their waters to Egypt�s
Nile. What historically appeared to be Egypt�s birthright has now
become a privilege they must negotiate with their upstream neighbors.
It is a major issue in Egypt�s upcoming elections.

�Some of the political parties are talking about the Nile agreement,�
said Dr. Mahmoud Abu-Zeid, �but all of them are talking about water
security, which means no disturbance of the historic rights and that
countries should not implement projects which would affect our uses of
the Nile in Egypt.� And that is what is at stake for Egypt as a newly
elected government in Cairo will define its role in a new regional
initiative that will decide the future of the Nile and its
beneficiaries.

The Nile Basin Initiative was begun in 1999. Dr. Abu-Zeid spent a good
part of his 12 years as Egypt�s minister of water resources and
irrigation trying to save those historic water rights in negotiated
agreements with Ethiopia and at least five other African countries. A
few months ago, it became clear that upstream neighbors could replace
Egypt�s old river-related traditions, with or without Egypt and Sudan.
Then, Ethiopia announced construction of a new dam that made Cairo
nervous.They call it the Renaissance Dam.

�We saw that the new dam Ethiopia has started to build might affect
the historic rights of Egypt,� said Abu-Zeid. Construction of
Ethiopia�s $5 billion hydro-electric dam on a principal source of
Egypt�s Nile began several months ago.

Ethiopia recently agreed to host officials from Egypt and Sudan to
prove that the dam, now called the Renaissance Dam, will not be used
to irrigate any of the large corporate farms the Ethiopian government
has leased to foreign investors in recent years. Though Ethiopia�s
funding of the dam�s construction is uncertain, Egypt remains
concerned and suspicious.

�What we have been assured is that this dam is for hydro-electric and
that it has no irrigation schemes in it,� said Abu-Zeid. �On the
other hand, we have heard about irrigation schemes in Ethiopia and
we�re not sure if any of them are in the Nile Basin.�

Mathematics of the Nile

Population has driven much of the new politics in the Nile Basin.
�Water doesn�t increase, but the population does,� said Richard
Tutwiler, a research professor at the American University in Cairo and
director of school�s Desert Development Center. In the 1950s, when
Egypt and Sudan decided how much of the Nile they needed, there were
about 22 million Egyptians and 9 million Sudanese and 18 million
Ethiopians.

Today, Egypt has a population of 82 million, Sudan has a population of
45 million, and Ethiopia has a population of 85 million. Between these
three countries the population has increased four times and in recent
years Egypt has succeeded in increasing by 25 percent its inventory of
farmlands by irrigating deserts through extensive and expensive canal
systems.

The other important numbers facing Egypt and its upstream neighbors
are the average annual flows into Lake Nasser. The total is 85 billion
cubic meters per year. Egypt uses approximately 55.5 billion cubic
meters, and some say that in years of high rainfall, Egypt has used
more than their share. Sudan (prior to South Sudan's independence)
typically used 18.5 billion cubic meters. The remaining 10 billion
evaporates on the way to or in Lake Nasser. The basin members
upstream have already taken their share before it reaches Lake Nasser
but population, economic development and climate change are affecting
all members of the basin.

Ethiopia takes high ground

Ethiopia�s ability to determine any of these events is a new
achievement after years of being ignored by Egypt�s and Sudan�s Nile-
based development.

In 1959, Egypt and Sudan met and agreed on how to share the waters of
the Nile as it flowed through their largely arid lands on the way to
the Mediterranean. It was a renewal of river rights they had enjoyed
since the British signed an agreement with the two countries in 1929.
Ethiopia, which provides an estimated 85 percent of the flow into Lake
Nasser from the Abay and other watersheds to the south, was not
invited. Emperor Haile Selassie wrote a letter of protest, to no avail.

After the 1979 Camp David agreement returning the Sinai Peninsula to
Egypt, President Anwar Sadat announced the launch of the Salaam Canal
which would divert Nile waters to the Peninsula by siphoning the
waters beneath the Suez Canal. Colonel Mengistu Haile Mariam, then the
ruler of Ethiopia, protested to the United Nations, to no avail.

�There was a lot of antagonism between these two countries, Egypt and
Ethiopia, and this has been going on since Sadat,� said Steven
McCaffrey, a law professor at Pacific University in Sacramento.
McCaffrey served for three years as a legal advisor on the creation of
a cooperative agreement for three years and advised the Nile Basin
council of ministers for one year.

Egypt played a major role in the decade of Nile talks that were
sponsored by the World Bank and other donors. The nine basin members
discussed and drafted a Nile Basin Initiative to manage the entire
resources of the Nile with greater equity and efficiency. If these
efforts succeed, the new agreement could end - or at least minimize -
decades of enmity.

But upstream neighbors have so far not agreed to Egypt�s demand that
no upstream nation can use water that would reduce their annual 55.5
billion cubic meters or to permit Egypt to maintain the right to veto
or even have prior review of upstream proposals.

Balancing powers on the Nile

An observer of these Nile negotiations said, �Fifty years later, the
stakes are very high. Ethiopia felt this is now their time in the sun.
And they were seen by Egypt as a threat.�

The party in power for the past 20 years in Ethiopia is the Ethiopian
People�s Revolutionary Democratic Party, headed for almost all of that
time by Prime Minister Meles Zenawi. They struggled to find an
economic policy to, as some in the party�s leader like to say, bring
Ethiopia �out of backwardness and poverty.�
�They promised a lot of development but were faced with drought and
degraded watersheds,� said the observer of the negotiations. Ethiopia
became more determined to push massive development of roads, bridges
and dams with the considerable assistance of Chinese loans and
expertise. With a series of new hydro-electric dams coming online,
Ethiopia wants to become this corner of Africa�s hydro-electric power
center.

Some, who have watched the Nile�s political changes, believe that
Meles altered the contentious tone of Egypt-Ethiopia relations a few
months ago by telling a delegation from Cairo�s transitional
government that ratification of the agreement by the upstream signers
can wait until Egypt, coming out of a revolution and regime change,
could study the proposals and inspect the Renaissance Dam plans.

�I think that was a very statesman-like position that Meles took,�
said Tutwiler, director of the Desert Development Center in Cairo.

The former Egyptian negotiator, Abu-Zeid, is now president of the Arab
Water Council in Cairo. He remains confident that Egypt will not be
harmed by plans that will have to be approved by a consensus or a
simple majority of the Nile Basin partners.

�There is enough water for everybody,� said Abu-Zeid. �The Nile is so
big that everybody can get his share. We should not worry about the
availability of resources. We should worry about how to develop joint
programs for the benefit of everybody.�

If Egypt and Sudan join the Nile water partnership, the decisions the
basin makes will be difficult, and will require new relationships
among those who feed Lake Nasser and those who take from it.

1 Oct - cost of the Renaissance Dam corrected from $5 million to $5
billion
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