Memorandum submitted by the CDC
INTRODUCTION
This note from CDC responds to comments made
in the Environmental Audit Committee's recent evidence session
with DfID Minister, Mike Foster MP on 9 March 2009. Committee
members Joan Walley MP and Martin Horwood MP spoke to Mr Foster
about the committee's recent visit to Cameroon and put on the
record comments that they had heard about CDC's involvement in
the construction of Memve'ele dam. The Department for International
Development is CDC's sole shareholder.
CDC is the UK's development finance institution
and invests in promising businesses in developing countries. As
part of its remit it invests in infrastructural projects that
are commercially attractive but which also boost the living standards
of people living in some of the world's poorest countries. CDC
invests through an intermediated model. It provides capital to
local fund managers who invest in the underlying investee businesses
in poor countries to help them grow and become more profitable
and sustainable. Improving environmental, social and governance
guidelines at investee companies is central to this process. By
supporting economic growth these investments contribute to poverty
reduction. This is particularly true with investments such as
Memve'ele because the lack of reliable energy sources in Africa
has a profound effect on basic development and economic growth.
Memve'ele is a 200MW Greenfield run of river
hydro project located in Southern Cameroon. The concession to
develop, finance, build and operate the dam was awarded to Globeleq
in August 2007 by the Government of Cameroon. Globeleq is a wholly-owned
CDC subsidiary company, managed by Actis. Globeleq planned to
meet 30% of the cost of the dam project, with additional financing
and support coming from the Development Bank of Central African
States, African Development Bank, other European Development Finance
Institutions, and the Multilateral Investment Guarantee Agency.
A RESPONSE TO
THE COMMENTS
MADE BY
JOAN WALLEY
MP AND MARTIN
HORWOOD MP
At the end of the hearing with Mike Foster MP
on 9 March (Q225), Joan Walley MP said "... CDC Group
was involved in the construction of a dam that was going to be
covering a large area of pristine rainforest and the indigenous
people raised all kinds of issues about that." Mike Horwood
MP went on to say (Q226) that, "They (CDC) were flooding
rainforest."
These comments do not accurately represent the
reality of the situation. There are a number of key facts that
the Committee need to be aware of:
1. The proposed dam is relatively small,
run of river hydro project and most of the area where the dam
would be located has already been designated for forestry concessions.
2. The clearing which has been done so far,
or at least since Globeleq has been involved at the project site
(September 2007), only relates to:
(a) the opening of a limited right of way to
obtain a clear line of sight to carry out topographic surveys
(for site study purposes);and
(b) the marking of the site boundaries (for site
delineation purposes), and did not result in flooding of the area.
Globeleq was far away from carrying out any
substantial clearing of the site as this was a very early development
stage of the project. Indeed, total area cleared is estimated
at little more than 0.4 square kilometres.
3. During the development phase, the Globeleq
team has engaged in regular discussions with key international
and local NGOs and frequently communicated with the relevant forestry
concession owners about the environmental impact of the dam. It
should also be noted that in no circumstance have any issues been
raised by local authorities when carrying out this initial work
on site and that those authorities were informed beforehand of
Globeleq's work plan.
4. A panel of environmental and social specialists
is already in place. The terms of reference for the selection
of the international consultant who would be charged with undertaking
the Environmental and Social Impact Assessment (ESIA), requires
the candidate to meet both World Bank operational policies regarding
the environment and IFC (International Finance Corporation) performance
standards on social and environmental sustainability. More information
is available on this here:
http://www.ifc.org/ifcext/sustainability.nsf/Content/EnvSocStandards
5. Globeleq investigated whether it will
be possible for the Memve'ele hydro project to earn carbon credits
through the Clean Development Mechanism (CDM) process.
6. Globeleq applies the IFC performance
standards during the development and operational stage of investments
into majority owned assets. It also ensures, for existing assets,
that environmental, health and safety management systems (EHSMS)
follow international best practice.
7. Unfortunately, due to lack of progress
on a number of issues, Globeleq have just informed the Prime Minister
of Cameroon that it is withdrawing from development of this project.
CDC takes seriously any suggestions about the
environmental and social impact of its investee companies. CDC
is confident that there have been high environmental, social and
governance standards in place throughout our involvement with
the Memve'ele dam. We would ask the committee to withdraw, or
at least amend the comments made in the uncorrected evidence of
9 March as they are inaccurate.
6 April 2009
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