EIB Pulls Back from Funding Gibe III Dam

[June 5: This press release stirred controversy resulting in a statement released by the EIB. Please see EIB's June 4 statement and our June 5 press release, Smoke and Mirrors of the EIB, for further clarification of the EIB's current position on Gibe 3 Dam.]

Boy filling gourd along Omo River

Photo by courtesy of Alison Jones, No Water No LifeThe European Investment Bank today announced that it will not fund the contentious Gibe 3 Dam in Ethiopia. The Euro 1.55 billion hydropower dam would devastate the ecosystems of Ethiopia’s Lower Omo Valley and Kenya’s Lake Turkana, and affect up to 500,000 people. Friends of Lake Turkana, International Rivers and Italy’s Reform the World Bank Campaign hailed the decision as a breakthrough for affected people and the environment, and called on the African Development Bank and the Italian government to refrain from funding the dam.

The Gibe 3 Dam is being built by Italian construction company Salini, which received the huge contract without competitive bidding. The European Investment Bank financed the Gibe and Gibe 2 dams, conducted a pre-assessment of the Gibe 3 Dam, and funds the project’s Economic, Financial and Technical Assessment. The no-bidding contract violates EIB’s procurement policy. In March 2009, Friends of Lake Turkana, a group of affected people in Kenya, urged the EIB not to fund Gibe 3 because the affected communities “could not withstand any more pressure on the little resources that we have”. A meeting between the EIB and Friends of Lake Turkana was scheduled in Nairobi for next week. Today, the head of the EIB complaints office cancelled the meeting and informed the group that the Bank’s President had decided not to fund the project.

Ikal Angelei, the coordinator of Friends of Lake Turkana, said: “The Gibe 3 Dam would lead to the ecological and economic collapse around Lake Turkana and would increase conflicts in this volatile region. The decision by the EIB President confirms that the dam cannot be built in line with international standards.”

The African Development Bank will be the next financier to consider funding for the project. Friends of Lake Turkana and International Rivers submitted complaints to the AfDB in March and April. International Rivers’ Africa director Terri Hathaway said: “The Gibe 3 Dam violates the AfDB’s policies on environmental and social assessment, poverty reduction, resettlement, public disclosure, and transboundary water management. Donors should not fund through the AfDB what they are not prepared to fund through the EIB.”

The Ethiopian government has officially requested up to Euro 250 million in development aid for Gibe 3 from the Italian government. Italy’s export credit agency has already denied support for the project. Caterina Amicucci of the Reform the World Bank Campaign said: “The Italian government should not waste its development aid on a dodgy and destructive deal such as the Gibe 3 Dam.”

Background
With a height of 240 meters and a price tag of Euro 1.55 billion, Gibe 3 is Africa’s tallest dam and Ethiopia’s biggest investment project. If built, the dam will wreak havoc on the Omo River’s natural flood cycle, and threaten the food security of up to half a million people from eight indigenous groups. Gibe 3 will affect ecosystems and disrupt communities all the way to the world’s largest desert lake, Kenya’s Lake Turkana. Lake Turkana supports 300,000 people and rich animal life. The Gibe 3 Dam would severely curtail the lake’s inflow, reduce water levels, increase salinity, destroy riparian forests, affect fisheries and push the lake’s vulnerable ecosystem to the brink of collapse.