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Confidential World Bank Evaluation Admits Future of Narmada Dam Uncertain

(Washington--16 May, 1995) A leaked World Bank evaluation of the controversial Sardar Sarovar (Narmada) Dam and Power Project in western India describes the irrigation and energy benefits and sustainability of the project as "uncertain," bringing into doubt the future of the project. The evaluation, which includes a "project completion report" and a memorandum to Executive Directors from the Operations Evaluation Department (OED), also admits serious shortcomings in environment, resettlement and rehabilitation components, project appraisal and supervision performance.

"The evaluation vindicates a majority of the views that Indian and international critics of the project have expressed for the last eight years, and concurs with many of the conclusions of the Morse Commission," said Lori Udall, Washington Director of International Rivers Network. "The Bank's evaluation department should now dig deeper into hydrology, dam height, project viability and economic impacts. A serious study of these uncertainties will reveal the unsoundness of the project."

The putative project benefits, hydrology and long term viability are brought into question in the evaluation. The OED memorandum states "the sustainability of project achievements is rated as uncertain." The Operations Evaluation Department also reveals that the economic rate of return is "clouded by many uncertainties" such as project delays and financing arrangements.

The Sardar Sarovar reservoir will result in the forcible displacement of over 150,000 rural poor and tribal people. The World Bank withdrew from financing the Sardar Sarovar Dam in March 1993, after eight years of intense controversy over the resettlement and environment components of the project, and following an independent review by the Morse Commission, which in June 1992, advised the Bank to "step back" from the project. While the project legal agreements between the Government of India and the Bank are still in effect, the Bank has failed to enforce important conditions on environment and resettlement.

The changing nature of the overall project could severely affect project benefits. Since its inception, the irrigation and energy benefits of Sardar Sarovar have been closely linked to the construction of a companion dam upstream called Narmada Sagar. During the controversy over Sardar Sarovar, the World Bank dropped Narmada Sagar from its list of projects under consideration, and has not indicated further interest in funding the project. Although the Madhya Pradesh state government began work on Narmada Sagar in 1992, Indian and international NGOs believe the project will falter due to lack of funds. The OED also states "it is difficult to predict the future of this [Narmada Sagar] dam with certainty when considering the environmental and [resettlement and rehabilitation] R & R impacts and financial difficulties of the state."

According to the Project Completion Report, extended delays in the completion of Narmada Sagar could result in a 25% reduction in power and 30% reduction in irrigation benefits of Sardar Sarovar. The OED evaluation admits that in order to investigate the implications of omitting the Narmada Sagar Dam, a modelling exercise would have to be undertaken in which a series of alternative smaller dams would have to be considered. As a result of this the OED states "major changes could be expected in the amount of water available for energy and for the command area in [the State of] Gujarat." The OED concludes "uncertainty remains concerning hydrological assumptions and the scale and sequencing of project benefits."

Udall believes that in light of the uncertainty surrounding the Narmada Sagar Dam, further investigation is required on the relationship between Narmada Sagar and Sardar Sarovar Dams and hydrology. "The Bank admits that funding for both Sardar Sarovar and Narmada Sagar is uncertain, but then continues to discuss them in the report as though they both will be completed," said Udall.

The evaluation supports most of the conclusions of the Morse Commission on environmental issues and resettlement of people, and rates Bank appraisal and supervision as unsatisfactory. Citing problems with resettlement, the OED states "substantial obstacles still remain." On resettlement, the evaluation reveals that the Bank conditions, which the Government of India failed to meet in March 1993, have still not been met and this will cause further delays in dam construction. These were basic conditions such as identifying the number of people to be displaced and completion of resettlement plans, which were supposed to be fulfilled as far back as 1985.

Despite the critical nature of the report, the Bank evaluation basically continues to support and justify the project, and cites several "achievements" such as progress on the power house, management information system and construction of the dam wall. At one point, the evaluation even states that after the "controversy" subsides, the Bank may consider financing some of the rehabilitation program. The Narmada Bachao Andolan ("Save The Narmada Movement") is skeptical. "The World Bank knows it is not welcome in the Narmada Valley. We would physically block them from coming here," said Medha Patkar, the fiery leader of the Andolan. "I doubt the World Bank Executive Directors would approve such involvement in the first place."

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