House of Commons - Trade and Industry

Select Committee on Trade and Industry Twelfth Report

TWELFTH REPORT

The Trade and Industry Committee has agreed to the following Report:—

ILISU DAM

1999

1. In the course of 1999 it became known that Balfour Beatty had approached the Export Credit Guarantees Department (ECGD) for a line of export credit in connection with the construction of a major hydro-electric dam to be built in the south east of Turkey, at Ilisu on the Tigris river. The dam is to be built by a consortium led by the Swiss company Sulzer Hydro. The British company Balfour Beatty are to lead the civil works joint venture, together with Impregilo of Italy, Skanska of Sweden (see para 8 below) and three Turkish companies. A number of other export credit agencies (ECAs) were also approached.

March 2000 Report

2. In the autumn of 1999 we conducted an inquiry into the mission and status of the ECGD, in parallel with an internal Government review. We heard something of the Ilisu project in the course of evidence.[1] Following the Secretary of State's announcement on 21 December 1999 that he was minded to grant export credit for the Ilisu dam subject to four conditions being met, and in view of the degree of controversy surrounding the project, we decided to undertake a brief separate inquiry. We heard oral evidence on 26 January 2000 and 15 February 2000 and agreed our Report on 28 February 2000.[2] In general terms we supported the line adopted by Ministers, although we were critical in some respects of the way the case had been handled. The Government responded in May 2000.[3]

Debate

3. At the time of our Report it had been envisaged that the revised full Environmental Impact Assessment Report (EIAR) would be produced in April or May 2000, followed shortly thereafter by contract signature. A decision from Ministers would then be required by the summer of 2000, leaving an opportunity in June or July 2000 for parliamentary debate before such a decision. We explicitly recommended a debate "in advance, rather than in the wake, of a Ministerial decision on export credit." The Government's Reply stated that Ministers would "consider this proposal carefully, depending on the availability of Parliamentary time at the relevant time".[4] The delay of a year and the extended possibilities for debate on Committee Reports mean that finding time for a debate before a decision is taken should not now be a problem. Together with the International Development Committee, which has also taken evidence on the project and come to a view on it, we reiterate our conclusion that there should indeed be a debate on the grant of export credit for the Ilisu dam before Ministers decide. Parliament is entitled to nothing less.

Publication of environment and resettlement reports

4. In the 14 months since we published our earlier Report, the timetable has slipped. We are still awaiting a sight of the EIAR and of the Resettlement Action Plan (RAP), which is to set out plans for those displaced by the reservoir. In November 2000 we were told, in the context of our exercise of following up previous Reports, that the Government did not have final dates for publication of the EIAR or RAP, and that publication was a matter for the buyer in each case— Sulzer and the Turkish authorities respectively.[5] It is our understanding that the Turkish authorities are not yet ready to release the documents. In early and late February 2001, the Minister responded to Written Parliamentary Questions by stating that a presentation on the EIAR would be made soon to the ECAs, and that the report would be made publicly available afterwards.[6] We understood informally that the EIAR might well be made available to ECAs in late April and then published. That would have enabled us to conduct at least a rapid analysis of the document in the extra time offered by the delay in the Dissolution of Parliament, originally anticipated in early April. We now understand that the timetable has slipped further, possibly as a result of Ministerial changes in Turkey. At the time of our consideration of this Report, publication was again said to be imminent. As for the RAP, we had understood from our November 2000 briefing by the Turkish State Hydraulic Institute (DSI) that it would be ready by the end of December 2000. The Minister for Trade has stated that he did not know if it would be made publicly available, although "we have advocated that they [the owners] do so".[7]

5. We had to rely in our earlier study on a report commissioned by Ministers on the draft EIAR and on comments commissioned by the Swiss ECA (Exportsrisikogarantie - "ERG") by another expert on that draft EIAR (the Bonhage Report). Neither the draft EIAR itself nor the Bonhage Report were published. US Eximbank studies on water quality and discharges were also apparently unpublished. We concluded in our earlier Report that "the process of consideration of whether to grant export credit for the dam has been bedevilled by an excessive degree of secrecy", and called on the ECAs within the OECD Group to "address the deplorable and counter-productive lack of transparency in the way in which documentation has been kept from the public on the Ilisu Dam Project".[8] The response to this did not reflect what we have no doubt is a sense of indignation shared by Ministers, but merely referred to "genuine problems of commercial confidentiality" and to having followed the US Eximbank guidelines.[9]

6. We have had informal access, from non-governmental sources, to a rough copy of the detailed comments made in August 2000 by Dr Ayse Kudat, a former World Bank expert acting as the consultant to ERG (the Swiss ECA), on a draft made available to her of the RAP— hereafter " the Kudat Report". The document was circulated to ECAs on a confidential basis. We were told in November 2000 that ERG, in response to a request to allow the document to be placed in the Library of the House of Commons, had told ECGD that it was not prepared to make it publicly available. Yet the Director-General of the Government Agency in Turkey charged with building the dam was happy to discuss the Kudat Report with us. We have laid this 40- page paper in the Library as a contribution in advance of publication of the full RAP, so that the House can in due course judge the extent to which the Turkish authorities have taken account of her comments. It is pointless to keep such documents from public scrutiny. It is not the first time that our detailed consideration of the request for export credit for the Ilisu dam has been bedevilled by excessive secrecy.

7. We have also drawn in this Report on comments on the Kudat Report forwarded to us in September 2000 by the Ilisu Dam Campaign; on the preliminary findings of the Ilisu Dam Fact-Finding Mission composed of representatives of five NGOs, which was made available to us before our November visit, and on their final Report published in mid-March 2001.

2000-01

8. Little has changed in the past year. The Swedish company Skanska has pulled out of the consortium in September 2000, giving contractual differences over arbitration as its reason; it is generally believed by those to whom we spoke that the company had been put off by adverse publicity and were seeking a way out. Contractual negotiations are understood to be well advanced with the rest of the consortium.

Visit

9. We visited Turkey in November 2000 primarily in pursuit of our programme of inquiries into industrial and trade relations with countries seeking membership of the European Union.[10] In view of the slippage in the timetable for decision-making on the export credit, we decided to use the occasion of this visit to see for ourselves the proposed site of the reservoir, to talk to those directly affected and to be briefed by the Turkish authorities who are sponsoring the construction. Five Members accompanied by the Clerk spent a long day in south eastern Turkey, and were subsequently briefed by the Turkish agency responsible for planning the construction of the dam. Individual meetings were arranged with several archaeologists in Ankara. The topic was also raised at a number of our other meetings, including a meeting with the Minister of Energy.

10. It is not for a UK parliamentary committee to pronounce whether the dam should be built. It may be that it will be built without UK export credit: the company could seek credit from another ECA. It could be built without Balfour Beatty's involvement; the Turkish authorities and the lead contractor could seek another major construction company to lead the team. We were told by DSI that it would not be the first time that they had proceeded without originally intended UK participation; the UK had originally been involved in the Ataturk dam. It may also be that the Turkish authorities decide not to build it for any one of a number of reasons, such as reprogramming the country's finances. We have seen our task as being to discover the truth about the project, so that Parliament and Ministers can come to a satisfactory conclusion on the grant of export credit.

11. The Turkish authorities and the Turkish parliamentary colleagues we met are naturally sensitive at the interest shown by foreign parliamentarians in a project which is of concern to us only because a UK company has sought the grant by DTI Ministers of export credit. We wish to express our appreciation to all who gave their time to talk to us. That includes those who accompanied us on our visit to Anatolia and spoke to us so candidly; the people of Hasankeyf who took the opportunity to express their views to us; municipal and regional officials; and those in Ankara who answered our questions very frankly. We can but hope that all concerned would be equally co-operative if the situation were reversed and a Turkish parliamentary Committee had come to visit the UK to inquire into, for example, the Channel Tunnel Rail Link or the Kielder Dam.

1 HC 52 of session 1999-2000 Back

2 HC 200 of session 1999-2000 Back

3 HC 482 of session 1999-2000 Back

4 HC 482, page iii Back

5 HC 109, Ev, p 23 Back

6 HC Deb, 6 February 2001, col 467w and 26 February 2001, col 413w Back

7 ibid Back

8 HC 200, para 13 Back

9 HC 482, page v Back

10 See Ninth Report, HC 360 of session 2000-01 Back