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Export Credit Guarantee for Ilisu Dam
Press release of the Federal Ministry of Economics and Technology
26 March 2007
On account of improvements to the project, which have been achieved in the meantime, the Interministerial Committee for Export Credit Guarantees (IMC) approved the change of the decision of general principle taken in November 2006 into the final issuance of an export credit guarantee for the German share in the planned hydroelectric power plant on 24 March 2007. Further measures to improve the project are to be implemented as the project progresses and are to guarantee that it will meet international standards.
From the start of the proceedings the Federal Government made the granting of an export credit guarantee conditional upon strict requirements being met. Its most important objective was to minimize the dam's effects on the people living in the region and on the environment and cultural assets in accordance with the standards fixed by the World Bank for such projects. After intensive and positive negotiations with Germany, Austria and Switzerland, as well as the international construction consortium, Turkey agreed to measures which exceed the practice so far customary in connection with dam construction projects by far.
In Austria, Switzerland and Germany export credit cover for deliveries and services having a total value of about EUR 450 million has been applied for. The overall contract value totals about EUR 1.2 million. The Federal Government covers a share of EUR 93.5 million for the construction of three diversion tunnels and three pressure tunnels by Ed Züblin AG, Stuttgart. To that, reinsurance in the amount of about EUR 100 million for German supplies to the Austrian partner in the consortium has to be added. Turkey will spend an additional amount of EUR 800 million on project-related measures, such as the resettlement of the population living in the region and the protection of cultural assets and the environment. Hence the overall costs of the project are estimated at EUR 2 billion.
The Federal Government considers the fact that is has been possible to appoint an independent panel of internationally renowned experts, who will monitor the compliance with the agreements reached and assist the Turkish buyer with the realization of the project, to be a particular success. The panel's expert knowledge is proven by well-known scientists and experts such as Prof. Robert Zwahlen (ecological questions), Prof. Klaus Nohlen (cultural assets) as well as Prof. Michael M. Cernea and Prof. Guoqing Shi (resettlement). The experts' panel stands for transparent and open communication on the progress of the project. It is planned to post regular reports on the implementation of the individual measures on the project web-site (http://www.ilisu-wasserkraftwerk.com).
There have been fundamental improvements with regard to all points of the project at issue: In order to maintain the population's livelihood, far-reaching arrangements to maintain its income will be implemented, e.g. in the form of employment at the construction work but also within the scope of related work on infrastructure and cultural assets. The most important cultural monuments will be relocated to a newly built cultural park und thus saved. Without the project, funds for securing and documenting the cultural monuments would not be available. Detailed requirements regarding water quality, flora and fauna in the project area complete the package of measures. Intensive farming with out-of-date irrigation methods and the discharge of untreated waste water from the towns already affect the water quality of the river Tigris. Due to the pressure exerted by Germany, Austria and Switzerland multiple-staged waste water treatment plants are being installed. Riparian inhabitants downstream in Syria and Iraq will also benefit from the improved water quality. Besides, the neighbouring states were given the assurance that the minimum flow rate will not fall below 60 m³ per second. Iraq and Syria were comprehensively informed and consulted about the dam project by the Turkish Government.
The Ilisu dam, which will be 125 m high and 1,820 m long, and the hydroelectric power plant will be constructed on the Tigris some 65 km upstream from the border between Syria and Turkey. The six turbines and generators (total capacity: 1,200 MW) are to generate more than 3,800 GWh annually using water power, which has minimum impact on the climate. In order to guarantee the energy supply to the population and, at the same time, reduce the dependence on fossil fuels, the Turkish Government pursues this project with high priority.
