The Gibe 3 Dam – A Test Case for China’s Role in Africa

August 10th, 2010 Print Print Email Email

The Gibe 3 Dam in Ethiopia is Africa’s most destructive dam project. So far, the Ethiopian government has not managed to attract any international finance for it. After several other funders pulled out, China’s biggest bank is expected to decide about a loan for Gibe 3 soon. The decision is an important test case for the environmental responsibility of China’s overseas lenders.

The Gibe 3 Dam is currently under construction on Ethiopia’s Omo River. As we have documented in eyewitness reports, articles and commentaries, the dam could lead to the collapse of the fragile ecosystems of the Lower Omo Valley and Lake Turkana. No less than 500,000 poor indigenous people depend on these ecosystems for their survival. The dam endangers two World Heritage Sites.

The concerns of affected people and NGOs have meanwhile been confirmed by official studies. A review of the project’s impacts on Lake Turkana commissioned by the African Development Bank states: “Lake Turkana is dependant on the Omo River for almost 90% of its inflow. The river is the lake’s umbilical cord. If the Omo River inflow is cut, the lake level will fall. (…) The filling of the dam has the potential to dry up Ferguson’s Gulf, the most productive fishing area of the lake.” The Ethiopian government has expressed an interest in using the Gibe 3 Project for irrigation. If this happens, the study finds, the world’s largest desert lake “could drop 40 metres, and could ultimately be reduced to two small puddles.”

Ethiopia will not be able to build the $1.7 billion dam project without international support. Yet in spite of strenuous efforts over the last four years, the government has not managed to secure any foreign funding. The institutions which have evaluated Gibe 3 include the World Bank, the African Development Bank, the European Investment Bank, Italy’s export credit agency SACE, and US bank JP Morgan Chase. For one reason or the other, none of them have become involved. Funders don’t usually inform the public if they decide not to finance a project, but it is clear that the Gibe 3 Dam would violate environmental standards which many of them have endorsed.

In May, Ethiopia’s government announced that the Industrial and Commercial Bank of China (ICBC) would fund a Chinese equipment contract for Gibe 3 with a loan of approximately $450 million. ICBC is China’s and the world’s biggest commercial bank. Kenya’s Friends of Lake Turkana, BankTrack and International Rivers immediately called on ICBC to stay out of the project. “Funding the Gibe 3 Project would seriously damage ICBC’s reputation as a diligent, environmentally responsible bank,” the three organizations warned in a letter to the bank’s CEO.

ICBC has meanwhile clarified that it has not yet taken a decision on the Gibe 3 loan. Wei Guoxiong, the bank’s Chief Risk Officer, assured a Chinese business newspaper that ICBC was evaluating the project “very carefully, very carefully”. “Although ICBC is a commercial bank, we are not a mercenary,” Wei Guoxiong said. “We will not support [projects with serious environmental impacts], whether domestically or abroad.” ICBC has expressed a strong commitment to China’s Green Credit Policy and has won numerous banking awards, including a prize for the country’s Best Corporate Citizen. Gibe 3 will put those commitments to the test.

ICBC has a 20 percent stake in South Africa’s Standard Bank. Standard Bank is advising ICBC on African projects such as Gibe 3. The South African bank has signed the Equator Principles, an environmental standard for the international banking sector. The Gibe 3 Dam would violate the banking standards on social and environmental assessment, indigenous peoples, and biodiversity conservation. While ICBC has not signed the Equator Principles, its Chief Risk Officer argues that its policies are “in some cases more stringent” than these standards.

Chinese investment in African infrastructure is much needed. We have often pointed out problems with specific projects and the environmental standards of Chinese funders. We have also acknowledged the environmental progress that has happened in recent years. With this background, the Gibe 3 Dam is a test case for China’s future role in Africa. Hardly any other project has been so extensively documented, discussed by international financiers and civil society, and covered in the media.

If ICBC declines to fund Gibe 3, China’s biggest bank will demonstrate that it respects international environmental standards in its funding decisions, and that it can become a leading actor in the global banking sector. If ICBC does provide funding for the project, it will put hundreds of thousands of poor people at risk, undermine international environmental standards, and taint its own reputation.

Peter Bosshard is the policy director of International Rivers. He blogs at www.internationalrivers.org/en/blog/peter-bosshard

  1. menbere
    | #1

    I don’t know what and who to believe about this project. Ethiopia need energy source as much as it can secure. Gilgel Gibe for sure does that job. Now the problem is that these organizations are saying it is bad for the environment. If true then, I am afraid it would be like , “Ye QoTun awerd bila.. Ye bibit one Talech”. And our country is building so many dams. Dams that rely on water supply, on rain. What if? Why not diversify?
    We never asked that when Tekezie was built, when Gil I was built, when….
    May be we should have asked.
    Let others like the UN and other neutral agencies give us their true opinions.

  2. Mesfen
    | #2

    Mesfen :
    I do not care how bad the Ethiopian government politically right now, but this project should supported by any Ethiopian. In the world we live in many dams have built, nobody said anything about their constrictions. In order to improve their citizens livelihood governments has taken a major projects like this one. Please do not be negative for everything.

  3. Pro-GIBE III
    | #3

    Let me see, Abugida, an alleged “Ethiopian” website is propagating an anti-Ethiopia development campaign by enemies of Ethiopia. Shame on you.

  4. Bemnet
    | #4

    menbere :
    I don’t know what and who to believe about this project. Ethiopia need energy source as much as it can secure. Gilgel Gibe for sure does that job. Now the problem is that these organizations are saying it is bad for the environment. If true then, I am afraid it would be like , “Ye QoTun awerd bila.. Ye bibit one Talech”. And our country is building so many dams. Dams that rely on water supply, on rain. What if? Why not diversify?
    We never asked that when Tekezie was built, when Gil I was built, when….
    May be we should have asked.
    Let others like the UN and other neutral agencies give us their true opinions.

    The rain will never stop coming. Don’t you worry. What I worry about is if there is too much rain and the dams broke or overflow. Then, I shudder to think what could happen to the people downstream.

  5. Anonymous
    | #5

    tazabi3

    @Pro-GIBE III
    befor you toking you have to think 3 times, because you are thinking just for yourself not for the others. don’t be selfish think about your country whats going on their a lot of crime, no justis

  6. Anonymous
    | #6

    All Ethiopians should support for the realization of this Tera project irrespective of what so ever harsh they are against the current government.
    No one cares even when some countries bombard innocent civilaians elsewhere.

  7. Temari
    | #7

    @ Pro_Gibe III and Gesfin: God bless you in expressing your love to our Country Ethiopia which has been and still now is a victim of not only foreigners having their own agenda but by traitors (or bandas) like Abugida, Ethiopian Review, etc. Regarding Gibe III project, these seemingly Ethiopian websites are doing more damage to Ethiopia than International Rivers or Friends of Lake Turkana.
    But, when it is time for Ethiopia to celebrate after passing all these hurdles, these Editors will be found on the first line shouting their lungs out that they love Ethiopia. Shame on you Abugida. WE pray to God to show you the light. Do not betray us for the small money you receive for posting such destructive articles about Gibe III.

  8. sam
    | #8

    It is very intersting from ethiopians such kind of coment.im just finding out that even tplf doing what the country needs that is bad.i dont think the tplf is tring to build atomic station just a dam which is very good for our country.if you guys dont like to see such good things be done in your own counrty,it’s very simple to understand who is who.good job tplf

  9. Anonymous
    | #9

    the western so called expert care about their commission to get from any project instead of environment they have all kind of energy source including nuclear power which is very very good for environment to damp all their waste all over the weld they are fighting agents Ethiopia which is the most not environmentally friendly country for them
    i am for one thing sure that Ethiopia is not able to pay the commission
    they need that is whey they are crying from when they care about as Africans

  10. aka
    | #10

    the western so called expert care about their commission to get from any project instead of environment they have all kind of energy source including nuclear power which is very very good for environment to damp all their waste all over the weld they are fighting agents Ethiopia which is the most not environmentally friendly country for them
    i am for one thing sure that Ethiopia is not able to pay the commission
    they need that is whey they are crying from when they care about as Africans

  11. Azeb
    | #11

    It is unfortunate that there is a TPLF government involved directly in profit making for its own organization called EFFORT which is a Tigrean-based organization. We have to acll a spade a spade. Any major economic development designed by this government is for the exploitation of the natural resources of other regions and should be opposed seriously if we have to reclaim the country for our collective good.

  12. Wonde
    | #12

    If u have a little vision of Democracy, u wouldn’t have to insult abugida, cause, this is the web site which is running different idea from different directions, It doesn’t mean all the written materials reflect their idea. Let’s hope all the best for our beloved country

  13. qesto
    | #13

    I don’t know why Abugida asks for comment if it can’t post it when it is against their expectance. They ommited my comment,shame on you Abugida

  14. Girma Wossen
    | #14

    HAVE YOU SEND A piece of BREAD (FOOD0 or BOOK TO ETHIOPIA and now you are opposing the GIBE project

  15. Anonymous
    | #15

    What is the problem with us Ethiopians?you may not like the Tplf(Eprdf)and its agenda but you must stand not aginst necceray infrastructure of our country being built by any group in power let us not forget it is duty and reponsablty of any group in power(left or right) to do what is good for the cuntry infrastructure etc..as this not a favour rather obligation so let us stop wasting our time on irrlevent issue.The Tplf/Eprdf has major problem that is affecting urban and rular people in
    millions losing their wealth(life eurrend property value)in the name of devlopment and passed to their direct or indirect oprators with covert mony supplied by their virous companies (efort the capo de cape as they call them)so the issue is justice,respect to edivdual right.We are going back indirect nationalization thisw should the concern of every ethiopian if you are not the victum todays you will be the next so fight before it comes to your door remember with happend to the Jews In Germany they never thought it will happen to all Jews.

  16. Anonymous
    | #16

    See your (ABUGIDA) counter above for comments on this issue. It counted 16 but you posted only 12. So you deleted 4 comments. Imagine yourself to be on the leadership like the Weyane group what makes you different? I suspect you could even be worst.

  17. Anonymous
    | #17

    @Anonymous
    jjj u r right

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