WASHINGTON, January 14, 2000 –– The World Bank has presented the report of an international Blue-Ribbon Panel of Advisors commissioned to study options for the future development of the Yacyretá hydroelectric project, on the Paraná River bordering Argentina and Paraguay. At the same time, the Bank's Vice President for Latin America and the Caribbean said the Bank does not endorse the Panel's key recommendation that the dam's water reservoir be raised from its current level.
The hydro dam, a joint undertaking of Argentina and Paraguay, involves the flooding of a large area, formation of a reservoir, as well as displacement and resettlement of area residents. It has prompted controversy over its social and environmental impacts, as well as its economic viability, since construction began in 1979.
The independent, multidisciplinary Panel, composed of six experts from Canada, the United Kingdom, Brazil, Chile and Colombia, and commissioned by the World Bank in September 1998, analyzed the implications of operating the Yacyretá dam with its water reservoir at its current level of 76 meters above sea level and, alternatively, of raising the water level and going to the originally-planned level of 83 meters above sea level.
The Panel, after consultations with interested and affected groups, including local and provincial governments, as well as non-governmental organizations from Argentina and Paraguay, recommends that the governments should set the aim of raising the dam's water reservoir to 83 meters above sea level. They state, however, that such a course will only be feasible if a series of fundamental changes are made in the dam's current management framework. Among the changes which the Panel saw as essential preconditions for raising the water reservoir level were amending the original treaty setting up the project, establishing new institutional and financial agreements on the project, and turning over operation of the dam to a new private-sector partner under the supervision of the Argentine and Paraguayan governments, and the Entidad Binacional de Yacyretá (EBY), which is responsible for operating the project.
The World Bank, however, distanced itself from this recommendation. "We believe that there should be no change from the 76-meter level, unless and until further study is undertaken to assess the social and environmental impacts, as well as extensive participatory consultation with the affected communities," said David de Ferranti, the Bank's Vice President for Latin America and the Caribbean. The Bank, he said, feels strongly that no action should be contemplated to raise the water level without guarantees that necessary measures were in place to protect affected communities — both those already resettled, as well as others who would be displaced by a raising of the water reservoir level — and the environment.
The Panel also recognized that raising the water level would entail risks. However, the Panel recommended this course as it believed it would end the uncertainty surrounding the project's future, increase the projected earnings by expanding power generation, and allow for more effective control of flooding. The risks, the Panel concluded, are offset by the need to ensure that the dam could be made financially and economically viable under the management of the private sector.
The Panel also said that keeping the water reservoir at its existing level would have negative consequences as it would mean significant economic losses, as well as creating frustration in nearby communities because of the danger of flooding that would remain.
Despite the World Bank's non-endorsement of the Panel's key recommendation, de Ferranti, who presented the report to representatives of the governments of Argentina and Paraguay January 11, said it should, "galvanize action by stimulating discussion among governments and groups interested in the project."
Following the Panel's work, the World Bank believes the two governments should undertake further studies and analysis to ensure better long-term management of the dam, that addresses the challenges of resettling a larger-than-expected number of families, and which ensures the dam's operations are sustainable from today's economic, social, environmental and institutional perspective. The Bank also believes insufficient analysis has been undertaken of the implications of operating the dam at intermediate levels between the current 76 meters above sea level, and the 83-meter design level favored by the Panel.
"Although we do not agree with the Panel's report, we believe that its conclusions help to demonstrate the very difficult changes that would be required if the dam's reservoir level is to be raised," de Ferranti said. "The Panel has shown that privatization is not an easy answer." He added that the Bank expects that future stages of analysis and decision-making on Yacyretá's future will be participatory and transparent, taking into account the many aspects involved in a project of this scale.
Manuel Sevilla, the Bank's manager for the Yacyretá project, will shortly be meeting with local authorities, representatives of the affected populations, non-governmental organizations and other parties in the communities of Encarnación, Paraguay, and Posadas, Argentina, to present and discuss the Panel's report directly with them. |
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