Ethiopia’s newest dam suffers tunnel collapse days after inauguration

Rome, Italy — A critical water-passage tunnel in the newly inaugurated Gilgel Gibe 2 hydropower project in Ethiopia reportedly collapsed this week.

With a price tag of EUR 374 million and a capacity of 420 megawatts, Gilgel Gibe 2 is currently Ethiopia’s biggest power plant. The project channels the water discharged from the Gilgel Gibe 1 Dam through a long tunnel and a steep drop directly to the valley of the Omo River.

The project, being built by Italian firm Salini, had already been delayed by more than two years. A high-profile January 13 inauguration was attended by Prime Minister Meles Zenawi and Italian government officials. “It is possible to speed up development without polluting the environment,” Zenawi declared as he cut the ceremonial ribbon.

About 10 days after the ceremony, African Energy Intelligence and the Italian public channel RAI 3 report, the project’s core component, a 26-kilometre-long tunnel, collapsed, shutting down operations for an extended period. The repair could take months, the news service reports.

Caterina Amicucci, of the Italian group CRBM and member of Counter Balance, said: “Gilgel Gibe demonstrates that cutting corners does not speed up development, but can rather produce costly disasters.”

CRBM has been monitoring the potential for corruption on the huge project, which did not have competitive bidding, in violation of Ethiopia law.

The Gilgel Gibe contract was also awarded without a feasibility study. Construction started – again in violation of Ethiopian law – without an environmental permit.

Italian law and international agreements require that development aid only fund infrastructure projects that are based on international tenders. Yet in violation of that law, and against the recommendation of its own evaluators, Italy’s Ministry of Development Cooperation awarded EUR 220 million in aid money for Salini’s contract on Gibe 2. The European Investment Bank (EIB), the EU’s bank, contributed another EUR 50 million, and the Ethiopian government funded the remaining EUR 104 million for the project.

The power project was supposed to be completed in December 2007, but shoddy planning took its toll. Poor geological studies overlooked sandy soils and other unexpected problems. Tunnel-boring equipment got stuck in the mud, and engineers had to redesign the tunnel’s path. Usually contractors carry the risks of such cost overruns. Yet the dubiously negotiated contract for Gilgel Gibe 2 exempts Salini from geological risks, so the Ethiopian electricity consumers and taxpayers ended up with the bill.

This new accident falls under the contractual responsibilities of Salini, and the company must restore the tunnel and cover all extra costs, but it is possible that part of these costs will again be transferred to Ethiopian taxpayers.

Despite the very weak institutional set up and poor performance of Gilgel Gibe 2, the main international financial institutions that supported it are now considering the next problematic project in the 5-dam scheme, the Gibe 3 Dam.

In July 2006, the Ethiopian government again awarded a USD 2.1 billion contract for the Gibe 3 Dam – the country’s biggest infrastructure project ever – to Italy’s Salini through direct negotiations. Again there was no competitive bidding. Again project construction started without an Environmental Impact Assessment and without a completed economic, financial and technical assessment.

Terri Hathaway, International River’s Africa Director, said: “If completed, the Gibe 3 Dam will devastate the fragile ecosystems of the Lower Omo Valley and Kenya’s Lake Turkana, on which 500,000 poor farmers, herders and fisherfolk rely for their livelihoods.”

International Rivers, CRBM, and Counter Balance call on the European Investment Bank and the Italian Cooperation to ensure that extra costs for Gilgel Gibe 2 will be covered by the contractor and sub-contractors and will not be transferred to Ethiopian taxpayers.  They also call on international financial institutions and Italian development aid not to invest in a Gibe 3 Dam which violates their safeguard policies and national law.


For more information, contact:

Caterina Amicucci, CRBM, 0039.3498520789 (Italy), camicucci@crbm.org
Lori Pottinger, International Rivers, +1 510 848 1155 (California), lori@internationalrivers.org
Desislava Stoyanova , Counter Balance, Tel: + 32 2 542 01 85 Mob: +32 487 617 482 (Belgium) desislava@bankwatch.org

Notes for editors:

Read Ethiopia’s Gibe 3 Dam: Sowing Hunger and Conflict here

“The Gilgel Gibe Affair”

“The Gilbel Gibe II Hydroelectrical Project- A Case of Super-Tied Aid”, Reality of Aid 2008

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