Japanese Ex–Im Bank Approves $302 Million Loan for Private Dam in Philippines

Monday, November 9, 1998

Funding decided despite opposition of local government, residents and NGOs, incomplete Environmental Impact Assessment

On 27 October the Export–Import Bank of Japan (JEXIM) signed an agreement with San Roque Power Corporation (SRPC) for a $302 million loan for the 345–MW San Roque Dam, located on the Agno River in the Philippines. The $1.5 billion project is being constructed by a consortium led by NY–based Sithe Energies Inc. and the Japanese Marubeni Corp.

JEXIM funding for this dam was approved despite strong local opposition to the project, which at 200 meters high and 1,000 meters long would be the largest private hydropower project in Asia. In August, Philippine NGOS sent a letter to JEXIM asking for a postponement of funding for the dam. Local residents of the affected municipalities, including Itogon, are outraged that JEXIM and the Philippine government have ignored their demands and are determined to fight the dam.

"The people of Itogon vehemently oppose the San Roque project because of its social and environmental impacts," says Joan Carling of the Cordillera Peoples Alliance, the leading Philippine group fighting the dam. "Already, almost two hundred farmers from San Roque have had their houses demolished to make way for the dam."

Promises by the government to provide affected people with land, housing, and social services have been broken. Some 160 families were forced to leave their homes before a proper relocation site had been identified. Over 925 families will be displaced if the dam is built and tens of thousands living downstream will face significant impacts due to erosion and impacts on fisheries.

The director of the San Roque Power Corporation has admitted that the EIA was inadequate and was missing critical components of watershed management and demarcation of the reservoir. "The study conducted by National Power Corp. was not accurate," said Raymond Cunningham, vice president and project coordinator of San Roque Power Corporation.
JEXIM may have breached its own guidelines by approving the loan. According to its environmental guidelines, JEXIM must ensure that people resettled by projects it funds have given their consent. Clearly, local people have not given their consent for the San Roque project. NGOs have further criticized JEXIM for not releasing EIA documents on which the decision to fund the project was based.

"The only solution is to conduct a fundamental review of institutions which have no public accountability. It is unacceptable that these public institutions, such as JEXIM, continue to fund large development projects in developing countries without consideration of environmental and social impacts," said Prof. Kazuo Sumi of Niigata University.

Carling says, "The people of Itogon demand outright cancellation of the project because of its tremendous social and economic impact, which will never be corrected even with amendments to the EIA."

Susanne Wong of International Rivers says, "The US company Sithe Energy has a responsibility to ensure that this project is carried out in accordance with US standards of accountability and transparency."

Last year, Marubeni and Sithe Energies Inc. received the government contract to build, operate and maintain the $1.5 billion project in Pangasinan province. In April, US–based Raytheon Co. won a $700 million sub–contract to design and build the facility. The Philippines’ National Power Corporation (NPC) is responsible for contributing US $400 million towards construction of the dam and spillway. JEXIM is currently considering another request by the Philippine government for a loan to finance NPC’s contribution.

For More Information:

    Ikuko Matsumoto, Friends of the Earth Japan/Chikyu no Tomo

    Susanne Wong, International Rivers, USA
    Tel: +1 510–848–1155

    Jill Carino, Cordillera Peoples Alliance, Philippines
    Tel: +063–74–442–2258

    Minnie Degawan, Cordillera Peoples Alliance, Philippines
    Tel: +063–74–445–3016