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FT, April 18, 2005: Rich nations consider more generous financing rules for big dam projects

 Copyright 2005 The Financial Times Limited
                       Financial Times (London, England)

                             April 19, 2005 Tuesday
                                 USA Edition 2


SECTION: ASIA-PACIFIC & INTERNATIONAL ECONOMY; Pg. 6

LENGTH: 455 words

HEADLINE:  Rich nations consider more generous financing rules for big dam projects

BYLINE: By ALAN BEATTIE

DATELINE: LONDON

BODY:

   Rich countries are considering extending more generous rules to financing large dams abroad, a move that will put them sharply at odds with environmental campaigners.

   Members of the Organisation for Economic Co-operation and Development, the intergovernmental association of rich nations, are meeting in Paris this week to consider new guidelines for official export credit agencies that finance trade and investment abroad.

   The guidelines propose more generous financing arrangements, including allowing longer repayment schedules, to support renewable energy schemes. But the European Commission has suggested that hydropower, which could include large dams, should be included as renewable energy under the proposals.

   Large dams in emerging market countries, such as the Ilisu dam in Turkey, the Maheshwar dam in India and the Three Gorges dam in China have become one of the most controversial areas in foreign investment, with repeated complaints that they damage the environment, displace local people and fail to live up to their promised benefits in generating power. Campaigners have targeted rich nations'
export credit agencies, which are often instrumental in determining whether a project goes ahead.

   Aaron Goldzimer, social scientist for the Washington-based campaign Environmental Defense, said: "We would welcome an agreement to give preferential terms to renewables, but this proposal is merely a Trojan horse for large dams."

   A World Commission on Dams, which reported in 2000, set tough new standards for consultation and assessment before new dams were built. But the Commission proposal for export credit agencies, while it acknowledges the WCD guidelines, does not advocate following them strictly. A November 2004 letter from Pascal Lamy, then EU trade commissioner, to the environmental campaign Fern, said:
"Literally referring to the WCD recommendations was regarded as not feasible by some stakeholders."

   No OECD officials were available for comment.

LOAD-DATE: April 18, 2005