China Conquers Africa’s Hydropower Market

Peter Bosshard
Tuesday, August 1, 2006

Companies from China, Germany, France and Sudan are currently building the Merowe Dam on the Nile in Northern Sudan. As the reservoir builds up behind the dam, 50,000 people are being displaced from the fertile Nile Valley to barren resettlement camps in the Nubian Desert. Tensions over displacement have flared up in repeated violent conflicts.

A French company applied for export credits for the Merowe project from the French government, but was rejected because of serious concerns over human rights violations. The World Bank also showed no interest in the project, having ceased funding in Sudan in 1993.

In the old days, large African dam projects that did not receive funding from the World Bank or Northern governments were doomed to fail. No longer. Thanks to the technology that Western companies transferred to China through projects such as the Three Gorges Dam, Chinese companies have become active contenders in the global market for large dams.

Three Chinese companies won the main construction contract for the Merowe Dam. Chinese dam builders are also promoting hydropower projects in many other African countries (see box). They are not concerned about the social and environmental impacts of the dams they build. This seriously undermines international efforts to make such projects more sustainable.

Commercial and political interests

The Chinese government supports the commercial interests of its dam-builders through generous lending by its export credit agency, the China Exim Bank. Within a decade after its creation, China Exim Bank became the world’s third-largest export credit agency. It provided loans of almost $400 million for the construction of the Merowe Dam.

China is not only pursuing commercial interests through its support for questionable dam projects. The Chinese government is also trying to strengthen its economic ties with countries such as Sudan, Nigeria and Burma that have large oil and mineral reserves – resources that it considers strategically important for China’s economic development. Finally, China is hoping to find political allies by wooing repressive regimes that are shunned by other governments. The undemocratic regimes of Burma, Sudan and Zimbabwe have found a reliable ally in the Chinese government.

The Chinese government does not appear to be troubled by the environmental and human rights impacts of the projects it finances. “Business is business. We try to separate politics from business,” China’s deputy foreign minister Zhou Wenzhong said in 2004. In the case of the Merowe Dam, China did not mind financing a project that was clearly bound to impoverish the people affected by it, and did not have a thorough environmental impact assessment.

There are indications that Chinese dam builders are even putting pressure on African governments to lower their own environmental standards. According to reports received by an expert of WWF, Chinese dam builders told the Zambian government that in the case of the Lower Kafue Gorge Project, the government should only assess the project’s economic return, and should not bother with assessing its environmental impacts.

Within China, civil society groups have succeeded in creating public awareness about the social and environmental impacts of large dams. In recent years, the Chinese government has strengthened its environmental guidelines considerably, and has ordered the suspension of several large dam projects. Civil society networks have no choice but to bring about similar changes for China’s role in building dams in other countries. In the meantime, African NGOs are pressuring their own governments to pay more attention to social, environmental and human rights concerns in planning water and energy projects.

China's African Dam Projects

In addition to Merowe in Sudan, China is involved in building the following large dam projects:

  • In Zambia, China's Sinohydro is working to develop the 660 MW Lower Kafue Gorge dam. China may also be interested in the proposed 120 MW Itezhi-Tezhi Dam.
  • In Ethiopia, Chinese companies are building the 300 MW Tekeze hydroelectric Dam. A Chinese power company is also competing for the contract to build a 100 MW hydropower dam on the Neshi River.
  • In Ghana, China has expressed an interest in developing the Bui Dam, a project that would flood parts of a national park.
  • In Mozambique, the China Exim Bank recently agreed to finance the Mphanda Nkuwa Dam on the Zambezi River (see page 16).
  • In Togo/Benin, the China Ex-Im Bank has announced it will provide partial financing for the Adjarala Dam. The project will displace over 8,000 people, and have serious environmental impacts.

Outside Africa, China is promoting hydropower projects such as Nam Mang 3 in Laos and Yeywa in Burma.