Inter Press Service
February 11, 2006

Official funders and commercial banks may publicly withdraw from direct lending for controversial dams such as Three Gorges, but then go ahead and support the same projects indirectly, a new report says.

New Delhi: India has lessons to impart in the financing of power projects, says a report released today which uses Enron’s discredited megaproject in the country and the controversial Narmada Valley project to expose the murky workings of indirect funding for such schemes. The report, "Power Finance: Financial Institutions in India’s Power Sector," banks on the Indian experience to examine the latest trends in the financing of development projects and in the process untangles what its publishers call "the complicated web" through which large dam projects are funded through financial intermediaries. "Power Finance," published by the International Rivers Network, Urgewald and the South Asia Network on Dams, Rivers and People, also documents resistance to uneconomical and destructive projects in India. "Finally, we have a single document that outlines all our struggles over all these years," Vimal Bhai, campaigner for the umbrella National Alliance of People’s Movements (NAPM), says of the report, authored by Peter Bosshard, former secretary of the Berne Declaration and a long-time researcher of financial institutions and the power sector. Bhai is particularly appreciative of the path laid out by Bosshard for civil society resistance in taking up the challenge posed by export credit agencies, commercial banks and financial institutions seeking to take advantage of India’s liberalization process, which began with power sector reform in the early nineties. "Our campaigns have had success against direct funding of undesirable projects, but like Bosshard says we need to focus on indirect funding of projects when bilateral and multilateral funders support financial intermediaries and private developers including the state electricity boards," Bhai said.