Is Ethiopia’s Renaissance Dam viable?

Not only are there grave technical dangers to Ethiopia’s proposed Renaissance Dam. It could prove an economic white elephant, writes Maghawry Shehata

In a previous article on Ethiopia’s Renaissance Dam I discussed a number of serious problems associated with this project. Specifically, I focussed on a number of geo-engineering issues involved in the construction of a hydraulic project of this size and reservoir capacity in the proposed location near the Ethiopian border with Sudan and the potential dangers these issues pose, if not properly addressed, to Sudan and Egypt, as well as to Ethiopia itself. Today, I will focus briefly on the economic feasibility of the project and its funding, drawing on available information and statistics, particularly those furnished by Ethiopia.

It is well known that a number of international agencies have been assisting Ethiopia in the construction of some of its dams. For example, the World Bank granted $331 million to help fund the Gilgel Gibe I Dam the construction of which was carried out by the Italian Salini firm. The Salini construction company was also awarded the contracts to build the Gilgel Gibe II and Gilgel Gibe III dams on the Omo River, the former funded by Italy and the European Investment Bank (EIB), the latter by the Ethiopian government. China funded the construction of the Tekeze Dam on the Atbara River at the cost of $365 million and carried out by the Sinohydro Corporation. China is also funding the construction of five other dams to the tune of $1.5 billion.

The construction of the Renaissance Dam is also being carried out by Italy’s Salini construction firm. The Ethiopian government has stated that it would foot the costs, which are likely to amount to $10 billion by the time of completion. However, due to limited fluidity, Addis Ababa has had to issue a bond for this purpose, purchasable by Ethiopians at home and abroad. In view of the per capita income levels in the country, raising this money domestically may prove difficult. It appears that Ethiopia has few alternatives. Either it can persist in its obstinate determination to build a dam of this size and pour into it huge sums of money which will detract from budgetary allocations for all other areas of life (healthcare, education, food supply, agriculture, environmental protections, etc), or it can borrow from foreign donors. A third alternative is to accept partnership from the downriver Nile Basin nations (Sudan and Egypt). But Addis Ababa has rejected the principle of partnership, while Egypt, for its part, has stipulated a number of conditions for partnership, the foremost being that Ethiopia abandon the idea of a mega-dam with such ambitious specifications and which will pose certain dangers not only for Egypt and Sudan, but for Ethiopia itself.

Recently, Turkey attempted to insert itself into the equation. During a visit to Ethiopia, the Turkish foreign minister announced that Ankara was willing to support the Renaissance Dam’s construction. Most likely, any package would include funding from Qatar, in view of Ankara and Doha’s shared hostility, at present, towards Egypt and the Egyptian people.

Such international political questions aside, a number of domestic economic and political questions surround over the Renaissance Dam. Some have questioned the cost-effectiveness of the project, especially in light of technical studies that point to construction risks as well as to a large loss factor in the energy generated by the dam — that the actual power generated by the Renaissance generators will be only 30 per cent of its theoretical production capacity, in contrast to 40 to 60 per cent rates for smaller hydroelectric plants in Ethiopia. Such problems have led many Ethiopian experts and commentators to question the value of the project for the Ethiopian people. Writing in one of the most widely circulating newspapers in Ethiopia, the prominent Ethiopian writer Barkout Bouhash openly wondered whether the Renaissance Dam would bring all the political and economic gains that the government claimed it would or whether the claims were no more than slogans. He pointed out that the government had never furnished the public with any concrete details. Another question of transparency — or the lack thereof — hovers over the dam. The construction contract was awarded without a competitive bid to Salini which, moreover, has a record of demanding amendments to contracts in light of technical obstacles entailing huge hikes in costs.

In view of the numerous flaws and mistakes that are already known to exist in the plans for the dam, the costs are certain to far exceed current projections. That construction will not be completed by the scheduled time, will further complicate matters for the Ethiopian government which has been working to obtain various strategic advantages, over Egypt in particular, and has planned accordingly. Meanwhile, Cairo has offered Addis ways out of its impending problems. Egyptian experts have proposed numerous alternatives that would enable Ethiopia to meet its energy and development needs, but Addis rejected these out of hand.
Nevertheless, Egypt has the responsibility to approach the Renaissance Dam question with good will, in keeping with international rules and conventions, even as its patience has worn thin during the various negotiating phases. Still, in addition to continuing to propose alternative solutions, Egypt must simultaneously address the international community, alerting it to Addis Ababa’s lack of cooperativeness and to the grave dangers its Renaissance Dam project poses to Egyptian water and food security and to the safety and well-being of the Egyptian people.

The Egyptian minister for water resources and irrigation has responded to his Ethiopian counterpart’s invitation to discuss the pending problems. Hopefully, this time the dialogue will prove constructive and not another attempt to buy time.

source Al ahram wekely