Concerns About the Epupa Hydropower Scheme

Saturday, February 7, 1998
This speech, by Steve Rothert of International Rivers and in cooperation with Earthlife Namibia, explains a number of concerns about the project. Windhoek, Namibia.

Thank you Mr. Chairman, honourable Ministers, Members of Parliament, Honoured Chiefs, distinguished guests.

My name is Steve Rothert and I work for International Rivers. International Rivers is a United States based organisation that works at the invitation of existing organisations and communities on river management issues, often large dams. International Rivers’s mission is to promote the sustainable management and protection of river resources, as well as the protection of communities that depend on them.

International Rivers was asked by Earthlife Namibia to assist them in reviewing NamAng’s Feasibility Study on the Lower Cunene Hydropower Scheme (Feasibility Study). Public evaluation of such a complex project is difficult, particularly when the public is small and ill–equipped to match the considerable resources of project planners.

At the request of Earthlife, International Rivers assembled a team of specialists from the US and elsewhere to review the Feasibility Study. The review was hampered by a lack of access to a complete version of the study and a very short time frame. International Rivers’s intent was to help evaluate the merits of the project. We regret any distress caused to government and project planners by the untimely publication of the results of our review, or by the tone of any of the reviewers. We take responsibility for this.

Nevertheless, International Rivers stands by the reviewers conclusion that the Lower Cunene Hydropower Scheme as described by the Feasibility Study is not a good or sound investment for the people of Namibia.

  • The project would result in unmitigable losses and damage to Namibia’s ecological and cultural resources;
  • The project does not meet important international funding standards;
  • The project involves considerable risks;
  • And there could be better, cheaper alternatives.

Losses and damage caused by the project

The unmitigable losses and damage the scheme will cause include:

  • Damage to the aquatic and terrestrial ecosystem of the Cunene River and rivermouth;
  • The loss of the remarkable Epupa Falls area that could play a greater role in Namibia’s tourism portfolio, bringing benefits for generations to come;
  • The loss through evaporation of at least 500 Million cubic meters of water. This is more than the total potential water supply in Namibia. It was surprising to find that the Feasibility Study attributed absolutely no value to this water – even in the shadow of Namibia’s worst water supply crisis, and in the midst of planning a US $600 Million project to extract water from the Okavango River.
  • Finally, the unmitigable losses and damage to the Himba community.

Project bankability

The bankability of the project as it currently stands is questionable. For example, the World Bank, which has funded more large dams than any other single institution, requires a sound mitigation, compensation and/or resettlement plan that will leave affected communities no worse off than before the project.

As the Feasibility Study concedes, there exists no such plan to mitigate impacts to the Himba community. In fact, it implies it is not even possible to protect their principle means of livelihood, namely livestock, because there is no available grazing land to replace the land that would be inundated by the reservoir. Moreover, contrary to statements made by NamAng this week, there does not appear to be any hope at this time of developing a mitigation plan.

I can say with confidence, therefore, that the World Bank, or any other lending institution with such basic project standards, would not consider supporting the scheme at this time.

Project risks

The proposes scheme also involves considerable risks. At 2.5 Million Namibian dollars, the cost of this project is equivalent to 1/5 of Namibia’s 1996 Gross Domestic Product. Committing to this project would increase the government’s expenditure on capital investment by more than four times. This is a very large project in relation to Namibia’s population and economy, the risks of which will be borne by the Namibian government and people. The decision to undertake this project, therefore, must be made only with the highest confidence in the project’s success.

The Feasibility Study indicates that if everything goes according to plan, the project will yield a 11.2% return on the investment. The study has set 10% as the minimum return to consider the project economically viable. International Rivers’s research indicates dam construction in developing countries often does not go according to plan. The Muelo Hydro Project in Lesotho is on the most recent example in this region.

It would not be unusual for a project of the scale of the Epupa Scheme (which would be among the largest dams in the world) to experience at least a one year delay and a 10% cost overrun. The Feasibility Study indicates that if the project experiences such a delay and overrun, the project would no longer be economically viable.

The project’s economics are also dependent on the financing package negotiated. Further depreciation of Namibia’s currency would further adversely affect the economic viability of the project. The Feasibility Study does not address this issue adequately.

The economic viability of this project depends on the reliability and predictability of the Cunene River hydrology. There is no hydrological record at either of the proposed dam sites. The Feasibility Study used a 12 year record from a site 200 kilometres upstream at Ruacana, and a longer hydrological record from a different basin, to synthesise a data base on which to predict the future and assess the project’s viability and benefits.

There is a risk that the equation developed by the Feasibility Study to relate the two sites will not accurately predict future flows. This would adversely affect the economic viability of the scheme. There is evidence that suggests flows in the Cunene basin are decreasing. There is a risk that this short term trend is the beginning of a longer drier period in the basin. If this is so, project economics would be adversely affected.

The Feasibility Study indicates the Cunene River experiences great variability in flows, including consecutive years of low flows. There is a risk that such a dry period will occur when NamAng is trying to fill the reservoir. The Feasibility Study indicates that such an occurrence would put the project’s economics at risk.

The Feasibility Study discusses a number of other risks related to project design, construction and operation. The sensitivity analysis suggests the project remains economically viable if one the possible risks occurs. If more than one risk materialises simultaneously, or even sequentially, the economic viability becomes questionable. The Feasibility Study concedes that it did not consider more than one adverse condition occurring at one time.


These risks, combined with the irretrievable losses and damages that project would cause, should give decision–makers serious misgivings about this project – particularly in the light of alternative power options and the lack of an immediate need to augment power supplies.

As you all know, Namibia imports a significant amount of cheap electricity from South Africa. Many experts consider this situation likely to continue for many years. In fact, Namibia is increasing its capacity to import cheap power from the RSA right now.

Moreover, since the completion of the Feasibility Study, as mentioned this morning, progress on the proposed Kudu Gas Field and associated 750 MW power plant casts further doubt on the need for the Epupa project at this time. According to the Feasibility Study, the 750 MW gas fired power plant now being developed would be able to supply electricity at a lower cost than the Epupa scheme, and would satisfy Namibia’s capacity needs until 2020. In addition, the risk of this project would be borne by the private sector, not the Namibian government and public.

Clearly, Epupa is not Namibia’s only option to secure its future power supply. So the question that we would pose to the Namibian government and people is, Why rush into the decision to build a controversial dam that would result in irretrievable losses and damage to Namibia’s precious resources when it’s not necessary?

Thank you.