The impacts and financing of large dams Jan Willem van Gelder, Frank van der Valk, Jan Maarten Dros, Janette Worm A research paper prepared for WWF International - Living Waters Programme November 2002 AIDEnvironment The impacts and financing of large dams Jan Willem van Gelder Frank van der Valk, Jan Maarten Dros, Janette Worm A research paper prepared for WWF international - living Waters Programme November 2002 AIDEnvironment Donker Curtiusstraat 7-523 De Bloemen 24 1051 JL AMSTERDAM 1902 GV CASTRICUM The Netherlands The Netherlands Tel.: +31 20 6868111 Tel.: +31 251 658385 Fax: +31 20 6866251 Fax: +31 251 658386 Email: [email protected] Email: [email protected] Website: www.aidenvironment.org Website: www.profundo.nl A937p937 2|2 Contents Acknowledgement 4 Executive Summary 5 Introduction 11 1 An introduction into the financing of companies and projects 13 1.1 The basics of company financing .................................. 13 1.2 Private financial institutions ........................................ 15 1.3 Public financial institutions ......................................... 17 1.4 Categories of financial services.................................... 17 1.4.1 Services related to acquiring equity................................... 18 1.4.2 Services related to acquiring debt..................................... 19 1.4.3 Other financial services .................................................. 20 2 Inventory of dams 23 3 Case studies 25 3.1 Turkey: Birecik dam and Ilisu dam (GAP) ....................... 25 3.1.1 Introduction ................................................................ 25 3.1.2 Key project data Birecik Dam ........................................... 28 3.1.3 Key project data Ilisu Dam .............................................. 29 3.1.4 Environmental issues and impacts .................................... 29 3.1.5 Other issues and impacts................................................ 31 3.1.6 Project financing Birecik Dam .......................................... 32 3.1.7 Project financing Ilisu Dam ............................................. 35 3.2 China: Three Gorges Dam ............................................ 37 3.2.1 Introduction ................................................................ 37 3.2.2 Key project data........................................................... 39 3.2.3 Environmental issues and impacts .................................... 45 3.2.4 Other issues and impacts................................................ 51 3.2.5 Project financing .......................................................... 58 3.3 India: Maheshwar Dam and Sardar Sarovar Dam ............ 67 3.3.1 Introduction ................................................................ 67 3.3.2 Key project data of the Maheshwar Dam ............................ 69 3.3.3 Other issues and impacts of the Maheshwar Dam................. 70 3.3.4 Project financing of the Maheshwar Dam ........................... 73 3.3.5 Key project data of the Sardar Sarovar Dam ........................ 76 3.3.6 Environmental issues and impacts Sardar Sarovar................. 77 3.3.7 Other issues and impacts of the Sardar Sarovar Dam ............. 84 3.3.8 Project financing of the Sardar Sarovar Dam ....................... 86 3.4 Laos: Nam Theun-Hinboun Dam.................................... 88 3.4.1 Introduction ................................................................ 88 3.4.2 Key project data........................................................... 90 3.4.3 Environmental issues and impacts .................................... 91 3.4.4 Other issues and impacts................................................ 98 An introduction into the financing of companies and projects 1 3.4.5 Project financing .........................................................107 3.5 Lesotho Highlands Development Project ......................110 3.5.1 Introduction ...............................................................110 3.5.2 Key project data..........................................................112 3.5.3 Environmental issues and impacts ...................................114 3.5.4 Other issues and impacts...............................................115 3.5.5 Project financing .........................................................117 3.6 Brazil: Tucurui Hydropower Complex ...........................123 3.6.1 Introduction ...............................................................123 3.6.2 Tucurui Hydropower Complex key project data...................125 3.6.3 Environmental issues and impacts ...................................126 3.6.4 Socio-economical issues and impacts ...............................128 3.6.5 Project financing phase I ...............................................130 3.6.6 Project financing phase II ..............................................132 4 Discussion 135 4.1 Environmental aspects ...............................................135 4.2 Financing aspects......................................................139 5 Conclusions 145 6 Recommendations 151 Annex 1: Inventory 153 1 Europe 155 1.1 Turkey: Deriner Dam..................................................155 1.1.1 Key project data..........................................................155 1.1.2 Project financing .........................................................155 2 Asia 157 2.1 China: Longtan Dam ..................................................157 2.1.1 Key project data..........................................................157 2.1.2 Project financing .........................................................157 2.2 China: Xiaowan Dam..................................................158 2.2.1 Key project data..........................................................158 2.2.2 Project financing .........................................................159 2.3 China: Ertan Dam ......................................................160 2.3.1 Key project data..........................................................160 2.3.2 Project financing .........................................................160 2.4 India: Kameng Dam ...................................................162 2.4.1 Key project data..........................................................162 2.4.2 Project financing .........................................................162 2.5 Laos: Nam Theun II Dam.............................................163 2.5.1 Key project data..........................................................163 2.5.2 Project financing .........................................................163 2.6 Malaysia: Sungai Selangor III Drinking Water Project ....167 2.6.1 Key project data..........................................................167 2.6.2 Project financing .........................................................167 2 3 Africa 169 3.1 Mali: Manantali Dam................................................. 169 3.1.1 Key project data..........................................................169 3.1.2 Project financing .........................................................169 3.2 Uganda: Bujagali Falls Dam ....................................... 171 3.2.1 Key project data..........................................................171 3.2.2 Project financing .........................................................171 4 Latin America 175 4.1 Chile: Pangue Dam.................................................... 175 4.1.1 Key project data..........................................................175 4.1.2 Project financing .........................................................175 4.2 Chile: Ralco Dam ...................................................... 177 4.2.1 Key project data..........................................................177 4.2.2 Project financing .........................................................177 4.3 Colombia: Urrá Dam.................................................. 179 4.3.1 Key project data..........................................................179 4.3.2 Project financing .........................................................179 4.4 Paraguay / Argentina: Yacyretá Dam........................... 181 4.4.1 Key project data..........................................................181 4.4.2 Project financing .........................................................181 4.5 Venezuela: Macagua II Dam....................................... 183 4.5.1 Key project data..........................................................183 4.5.2 Financing of Macagua II dam..........................................183 4.5.3 Financing of transmission lines .......................................184 4.6 Venezuela: Caruachi Dam .......................................... 185 4.6.1 Key project data..........................................................185 4.6.2 Project financing .........................................................186 4.7 Venezuela: Tocoma Dam............................................ 188 4.7.1 Key project data..........................................................188 4.7.2 Project financing .........................................................188 Annex 2: Index of financial institutions 189 Annex 3: Notes 195 An introduction into the financing of companies and projects 3 Acknowledgement We thank our colleagues at WWF, Richard Holland, Gernant Magnin and Ute Collier for the inspiring collaboration, fruitful discussions and lively interaction throughout this project. 4 Executive Summary Project objective This report forms the result of the first phase of the project “Benchmarking of