Information in: Español - Français - Deutsch - Português - Russian - Japanese - Svenska - Italiano - Suomi

Sudan's Merowe/Hamadab Dam

International Rivers Network and The Corner House, July 6, 2005

The following update summarizes the responses to the report on the Merowe Dam Project in Sudan that International Rivers Network and The Corner House published in early May 2005, and other recent developments. The main funder of the project is the China Export Import Bank.

Background:

The Merowe/Hamadab Dam Project in Sudan is the largest hydropower project that is presently being developed in Africa. The dam will turn a 174 kilometer stretch of the Nile into a reservoir, and will generate electricity with a capacity of 1,250 megawatts. The project will displace about 50,000 people. About 10,000 people have already been moved to El Multaga, a settlement in the Nubian Desert.

The Merowe/Hamadab project is being built by Chinese and Sudanese companies. The project is financed by the China Export Import Bank, and various Arab financial institutions. Major contracts have been awarded to Lahmeyer International (project management), Alstom (hydroelectric equipment), and ABB (transmission).

In February 2005, Peter Bosshard (International Rivers Network) and Nicholas Hildyard (The Corner House) visited Khartoum and El Multaga to discuss the impacts of the Merowe/Hamadab Project. In early May, they published a report that summarized the findings of their trip.[1]

The Merowe/Hamadab Project has serious social and environmental impacts. Compensation for lost assets is not adequate, and many affected people are being frozen out of entitlements altogether. The soils at the resettlement site are so poor that even with irrigation, the farmers cannot sell their produce on the market. They are being charged for services that they were promised for free, and so the poverty rate among the displaced people is rapidly increasing. The project authorities refuse to recognize the committees that represent the affected communities, and have responded to peaceful protests with violence and repression.

Sudan's Ministry of Environment has never had the chance to review the project's brief Environmental Impact Assessment, and so the project is in violation of Sudanese law. According to an analysis by The Corner House and IRN, the project also violates at least five of the seven Strategic Priorities of the World Commission on Dams, and the World Bank safeguard policies on Environmental Assessment, Natural Habitats, Involuntary Resettlement, and Cultural Property.

The NGO report on the Merowe/Hamadab Project was well received by academics and other experts within Sudan, international civil society, the media, and other observers. The report was covered in the BBC, the New York Times, Inter-Press Service, the IRIN News Service, the Khartoum Monitor, and the Sudan Tribune, among other media.

The response of the companies

On April 28, 2005, IRN and The Corner House sent advance copies of their report to Lahmeyer International (LI), Alstom, and ABB. They asked the companies to use their influence to address the social and environmental problems of the project, and to suspend construction in the meantime.

On May 23, Henning Nothdurft, the CEO of Lahmeyer International, responded to the NGO report. Nothdurft stressed that LI was providing "engineering services of a purely technical nature", was contractually forbidden "to pass project specific information to third parties" without permission from the project authority, and was therefore "not the right contact party". The CEO said that the company still intended "to assess the issues raised in your report and to respond to them", after getting permission to do so from the project authority.

In a memorandum that was attached to the letter from Henning Nothdurft, LI defended the project because an increase in electricity generation was "most urgently needed to create new jobs for millions of people and to safeguard social stability". The memorandum also stated that "we agree that the participation involvement process has to be intensively addressed, and this without delay".

Bjoern Edlund, Senior Vice President for Corporate Communications and Sustainability Affairs of the ABB Group, responded to IRN and The Corner House on June 15. According to Edlund, the NGO report provided "a good foundation for further discussions about the project, ABB's involvement, and last but not least about the scope of our responsibilities as a supplier".

According to the letter, a senior ABB manager conducted a site visited, and the company realized that "some commitments made to those resettled have not yet been met". In response, ABB was examining "how we could support proper electrification of the new settlements". The company was also working with a human rights expert, Prof. Alan Miller from Glasgow, to scope and implement a "stakeholder process" in Sudan. At the same time, Edlund argued that it would be "impractical" and "counterproductive" to suspend project construction until the social and environmental problems had been addressed. ABB and the NGOs agreed to stay in touch regarding the multi-stakeholder process.

Alstom has a $250 million contract to supply turbines and generators for the Merowe project. The company informed the Business & Human Rights Resource Centre, an independent documentation centre, that it would response to the NGO report later. After more than two months, and in spite of reminders, Alstom has still not responded to IRN and The Corner House.[2]

The response of financial institutions

The Merowe/Hamadab Dam Project is primarily being financed by the China Export Import Bank (China's export credit agency) and the Sudanese government. Other funders include the Arab Fund for Economic and Social Development, and the Development Funds of Saudi Arabia, Kuwait, Abu Dhabi, and the Sultanate of Oman. IRN and The Corner House sent a copy of their report and a letter to China Exim Bank on April 28, 2005. China Exim Bank has so far not formally responded to the NGO report.

In July 2004, four international banks - Citigroup, Deutsche Bank, Goldman Sachs and HSBC - arranged a $750 million bond for China Exim Bank. Friends of the Earth/US and IRN had at the time warned the banks about the financing of socially and environmentally destructive projects by China's export credit agency.

On April 29, IRN and The Corner House asked the four lead arrangers of the bond to urge China Exim Bank to contribute to a solution of the social and environmental problems of the Merowe project. Citigroup, Goldman Sachs and HSBC responded by informing the NGOs that because the July 2004 bond was also being sold in the United States, China Exim Bank had to confirm that the proceeds of the bond issue would not be used to finance exports to any country subject to US sanctions. This included Sudan, and so the banks were satisfied that they were not helping to finance the Merowe Dam.

The banks assured the NGOs that they would examine projects such as the Merowe Dam as part of their environmental due diligence if they considered further business transactions with the China Exim Bank. On June 11, a trade journal reported that China Exim Bank had mandated four banks - BNP Paribas, Citigroup, HSBC and Merrill Lynch - to launch another bond of $1 billion in the third quarter of 2005. If this news report is correct, the fact that China Exim Bank is financing projects that violate host country law and international standards does not seem to deter these banks from intensifying their business relations.

Deutsche Bank responded to the NGO report by saying that the bank was not involved in the Merowe Project. Citing reasons of confidentiality, Deutsche Bank did not respond to the questions regarding their relationship with China Exim Bank.

Reactions by donors

In April 2005, international donors pledged $4.5 billion over three years to support the peace and reconstruction process in Sudan. IRN and The Corner House welcomed this support. At the same time, they urged the international donors to take the negative experiences with the Merowe/Hamadab Dam Project seriously, and to make sure that support for new infrastructure projects would not conflict with international social and environmental standards. The World Bank acknowledged the report and expressed interest in its findings.

The NGOs shared their report with several embassies that they had visited in Khartoum in February 2005. The embassies agreed to take up the case of five representatives of the affected communities who had been detained and arrested in December 2004 in their political dialogue with the Sudanese authorities.

Reactions in Sudan

IRN and The Corner House sent their report to the Merowe Dam Project Implementation Unit, the project authority under Sudan's Ministry of Irrigation and Water Resources, on April 28. The project authority has so far not formally responded to the report.

According to insiders, the NGO report and the media attention that it created did stir up a debate within the Sudanese authorities. The Higher Council for Environment and Natural Resources (HCENR), the technical arm of Sudan's Ministry of Environment, was recently asked to review the project's Environmental Impact Assessment. The HCENR is supposed to review and approve such documents before projects are approved, but had never gotten access to the Environmental Impact Assessment in the case of the Merowe/Hamadab Dam Project.

The debate about the report has so far not seemed to improve the situation of the affected communities, and particularly the situation of the people who have already been displaced. By June 2005, all affected people of the Hamadab community were involuntarily resettled to the El Multaga site. Affected people report of bribes and coercion by the responsible district officials.

On May 25, 2005, Sudan's Minister of Energy told a committee of affected people that he would support the release of the committee members that were arrested in December 2004 if the committee accepted the project's terms of resettlement. This indicates that the detainees are innocent, and were being kept hostage to put pressure on the affected people. On June 30, on the 16th anniversary of the coup that brought the current government to power, the detainees were released, together with all other political detainees in Sudan.

International Rivers Network and The Corner House will continue to monitor the social and environmental impacts of the Merowe/Hamadab Dam Project. The NGOs will continue to hold all parties who are involved in the project responsible for the impacts. In cooperation with the affected communities and other interested groups, they will also recommend concrete measures to resolve the social and environmental problems.

Notes:

[1] See Peter Bosshard, Nicholas Hildyard, A Critical Juncture for Peace, Democracy, and the Environment: Sudan and the Merowe/Hamadab Dam Project, May 2005, <http://www.irn.org/programs/merowe/index.php?id=050428merowe.html>http://www.irn.org/programs/merowe/index.php?id=050428merowe.html

[2] See <http://www.business-humanrights.org/Links/Repository/898303>http://www.business-humanrights.org/Links/Repository/898303 for a compilation of documents and correspondence on the Merowe/Hamadab Dam Project