A coalition of international non-governmental organisations welcomed this week’s announcement by the European Investment Bank [1] that it would no longer consider financing for the Gibe III hydroelectric project in Ethiopia.

Citing that the “Ethiopian government has found alternative sources of finances,” the bank’s decision follows the signing of a memorandum of understanding between EEPCO, the Ethiopian state-owned electric utility, and Dongfang Electric Machinery Corporation, a Chinese state-owned company, to provide electrical and mechanical equipment for the project [2].

In March 2010 coalition members Counter Balance, International Rivers, Campaign for the Reform of the World Bank, Survival International and Friends of Lake Turkana launched a global call to halt construction on the Gibe III dam because if completed, it would permanently jeopardise fragile ecosystems in both Ethiopia and Kenya and dramatically alter the lives of 500 000 people in the region [3].

But while the groups applaud that no European Union funds will be granted to such a destructive project, fresh concerns arise in light of the bank’s 'exit strategy' from the project, a characteristically opaque move that underscores problems plaguing the bank’s involvement in the Gibe III project.

Caterina Amicucci, coordinator for Italian coalition member Campagna per la Riforma della Banca Mondiale, said, “The EIB had ample opportunities to play a crucial role in promoting sustainable development policies and use its leverage on the Ethiopian government to focus on a mix of energy supplies that would include truly green sources.”

Though the EIB has been involved in a 'shadow appraisal' of the project since 2007, having financed technical, environmental and social assessments studies of the project’s feasibility, none of these studies were disclosed to the public [4] nor were any stakeholders affected by the project engaged in consultations.

Ikal Angelei from Friends of the Lake Turkana commented, “The European Union, through its member states, has invested considerable efforts to stabilise the border regions of Sudan, Kenya, Uganda and Ethiopia. It is reprehensible that while such strides are being made towards peace for these local communities, the EIB would consider a project whose construction would contravene such efforts.”

“And instead of acknowledging the long list of egregious shortcomings with the project, like its violation of the United Nation’s Declaration on Indigenous Peoples, the EIB’s justification that the government has found other sources of finances is simply a cop out,” added Angelei.

For more information, contact:

Caterina Amicucci, Campagna per la Riforma della Banca Mondiale/Counter Balance
Email – camicucci@crbm.org
Tel +390 678 268 55

Ikal Angelei, Friends of the Lake Turkana
Email – ikal@friendsoflaketurkana.org
Tel +254 736 685 118

Notes for the editors:

[1] The official press release announcing the decision Gibe III is available at the EIB website .
[2] The memorandum of understanding is being backed by a potential USD 500 million loan from the Industrial and Commercial Bank of China (ICBC).
[3] Specifically in Ethiopia the project’s construction would stop the annual floods of the Omo river, eliminating the crops of indigenous farmers in the lower Omo valley and reducing available grazing land. The reduction of arable lands is also expected to exacerbate tensions and conflict among local communities, threatening progress that has been made over a number years of peace building efforts. In Kenya it is estimated that the dam will reduce the Omo river’s flow into Lake Turkana, lowering water levels up to ten metres. Such an impact would be particularly detrimental to the local fishing industry, which employs approximately 100 000 people, as well as to food security for hundreds of thousands of Kenyans. More background information is available from the coalition’s website.
[4] Italian member of the Counter Balance coalition, Campagna per la Riforma della Banca Mondiale, lodged a formal complaint last May at the EIB to obtain the studies’ findings.