Tag Archive for 'world dams'

Beware large dams and their handlers — study

Photo retrieved from: www.bdlive.co.za

“MEGAPROJECTS should be approached with caution, as few managers anywhere in the world are able to forecast their costs and deadlines correctly, new research on megadams between 1934 and 2007 shows.

This applies particularly in the energy field and in Africa, making South Africa’s support for the largest hydropower scheme in the world, the $100bn Grand Inga project in the Democratic Republic of Congo, quite risky.

Large dams usually overshoot their budgets by an average of 96%, which is more than any other asset class, including rail, roads and tunnels, Atif Ansar, Oxford University lecturer and associate fellow at its Saïd Business School tells Business Day.

Dr Ansar has co-authored a report published this month in Energy Policy journal, titled Should We Build More Large Dams? The Actual Cost of Hydropower Megaproject Development. “One ill-conceived dam in a developing country has the potential to cause a sovereign debt crisis,” he says.

Pakistan’s Tarbela dam, built in the 1970s, resulted in a 23% increase in Pakistan’s external public debt stock between 1968 and 1984. Pakistan is still paying, decades later, says Dr Ansar.

Costs of dams are often too high to deliver risk-adjusted returns even in developed countries, his research has found.

Three out of every four large dams surveyed suffered cost overruns. They also took an average of 8.6 years to build, often making them ill-advised, and even dangerous.

African nations are particularly vulnerable. Costs are likely to spiral in countries with low per-capita incomes, unstable currencies and high inflation rates. Without strong economic fundamentals, as well as high-level expertise to manage complex projects, developing countries are at risk of damaging their economies by constructing large dams, Dr Ansar says.

Brazil’s $14.4bn megadam, the Belo Monte hydroelectric project, is a classic example.”

Read more: BDlive