Company Profile: ABB Asea Brown Boveri Ltd (incorporating Alstom)

ABB is a company used to plaudits. Since its birth in 1988 — the result of a merger between the European engineering giants Asea of Sweden and Brown Boveri of Switzerland — it has established itself as one of the world’s biggest and most dominant engineering and technology companies. Major divisions include power generation; power transmission and distribution; financial services; transportation; and industrial and building systems. In addition to supplying oil, gas, nuclear and petrochemical generating and distribution equipment, the company’s energy divisions have been involved in numerous dams around the world, often acting as lead equipment supplier. ABB power plants currently account for about 20% of the world’s total installed hydropower capacity.

Through acquisitions, joint ventures and internal expansions, ABB has grown from a mainly European company with orders of $28 billion and 170,000 employees in 1988 to a global group of 213,000 people generating orders of $35 billion in 1998.² In 1989, ABB purchased 40 companies, including the worldwide power transmission and distribution operations of Westinghouse Electric Co. of the US. A year later, it began "an aggressive programme of expansion in Central and Eastern Europe"³ and began to expand into Asia. By 1995, ABB’s Asian operation had 30,000 employees and "100 plants, engineering, servicing and marketing centres", sales quadrupling from $2 billion in 1988 to $8 billion in 1997, a figure the company hoped to double by the end of the century.⁴ Meanwhile, in Europe, the company is preparing to capitalise on the planned expansion of the European Union by integrating its Western European operations with those in Central and Eastern Europe, where the company now has an interest in 70 companies, with almost $2 billion in sales and some 30,000 employees.⁵

ABB has carved out a global niche for itself that has consistently translated into healthy profits and brought a five-fold increase in its share value since 1988 — with shares rising by an average of 23% a year from 1988-96, well above the stock exchange index in Zurich, its home base.⁶

Widely regarded within the business community as well-managed, thrusting, and at the cutting edge of technology and business thinking, ABB has earned itself an enviable and award-winning reputation, not only in Europe but worldwide. In 1995, it received Ernst and Young’s Global Growth Award. The same year, ABB’s then chair and chief executive, Percy Barnevik, was awarded the prestigious European "CEO of the Year Award".⁷ In 1997 — for the fourth year running — top European managers and investment analysts voted ABB "Europe’s Most Respected Company" in a survey conducted by Price Waterhouse and the Financial Times. Among the qualities most admired in ABB were its "strong and well thought out business strategy", its "robust and human corporate culture" and its "imaginative approach to the process of innovation".⁸

Even as the Financial Times was announcing the results of its 1997 survey, however, ABB was running into trouble. 1997 saw poor results: the return on equity was half that in 1996, revenues declined by 7% and net income fell to $572 million.⁹ One reason lay in the economic collapse in South-East Asia: although orders overall increased 3% in 1997, they remained flat in Asia. The biggest shadow, however, was cast by one of the smallest sections of ABB — hydropower, accounting for less than 8% of orders in the power division in 1996.¹⁰ As predicted by a number of analysts, its flagship contract — the Bakun dam in Malaysia — fell apart, leaving the company with costs of $102 million and a severely dented reputation.

Despite the Bakun debacle, however, overall orders have continued to rise, fueled by growth in most emerging economies and in the US and Nordic countries. As a result, "1997 orders received grew 3% to $34.8 billion."¹¹ In the first half of 1999, the company earned a net income of $839 million — up 32% — and revenues stood 10% higher.¹² 1999 also saw Barnevik’s successor, Goran Lindahl, win the prestigious Industry Week "CEO of the Year" award, the first non-US CEO ever to have done so.

Looking Abroad For Growth

ABB has long pursued a "three-leg" strategy of "targeted expansion" in Europe (including the former Soviet Union), the Americas and Asia Pacific — the world’s most important regional trade zones. Goran Lindahl predicts that future growth is likely to come from emerging markets, in particular Asia, Central and Eastern Europe and Latin America.¹³

As a result, the company has been undergoing major restructuring. Although "core competence centres" will remain in Europe and North America, ABB is shifting much of its production abroad, not only to get closer to customers in emerging markets but also to take advantage of cheaper labour abroad.¹⁴ One consequence will be a further loss of jobs in Europe and North America, where ABB has already shed 62,000 jobs between 1990 and 1997. By contrast, the number of employees in Asia and central and Eastern Europe rose by 57,000 — and is expected to rise by a further 30,000 by 2001.¹⁵ ABB tries to act as a "local" company wherever it operates. As the Norwegian NGO, FIVAS, notes: "The corporation buys national companies and tries to gain control over the domestic market . . . The management of these companies is recruited nationally when possible. Thus, the company acts as an ‘insider’ in almost all countries where it is active."¹⁶

ABB Alstom Power

In March 1999, ABB and Alstom announced the merger of their power generation businesses on a 50:50 basis, which was approved by European Union competition authorities in October 1999.¹⁷ The new joint company is to be called ABB Alstom Power and will be based in Brussels under president and CEO Claude Darmon, who was previously deputy CEO of Alstom. A management board and a supervisory board, chaired by ABB president Goran Lindahl, control the company.¹⁸

The new company includes all of ABB’s Power Generation segment, except its nuclear activities and its financial services division. Alstom is contributing all its energy sector activities except the General Electric-based heavy-duty gas turbines, which have been divested to GE. The new company will create the world’s largest supplier of power generation equipment, employing some 58,000 people in 100 countries. According to ABB, the joint company will be better able to respond to privatisation and the growing market for power generation equipment because of the two companies’ complementary product ranges, geographic scope and R&D capabilities.¹⁹

The merger follows a world trend towards increasing corporate concentration and market consolidation in the engineering equipment sector. With the ABB-Alstom merger, a trio of companies now dominate the world power plant market, supplying 80% of turbines for new projects.²⁰ According to the consultancy firm Datamonitor, those companies are General Electric (GE), Siemens²¹ and ABB Alstom Power.²²

As of October 1999, the company had 105 turnkey projects under construction, employed 58,000 people in 100 countries and had an estimated annual revenue of $11 billion. Pursuing ABB’s strategy of "glocalisation" (acting locally globally), the company has a "Country President" in those countries where ABB Alstom is a major industrial presence.²³

Like ABB, Alstom has been involved in numerous dam projects. Among those for which it has supplied equipment are: Tucurui, Itaipu — Brazil; La Grande 2, 2A, 3, 4, La Forge 1 (James Bay) — Canada; Three Gorges — China; Pehuenche — Chile; Koyna IV — India; Tarbella — Pakistan.²⁴

Environmental and Social Policies

Over the years, ABB has issued numerous statements supporting the need for sustainable development. In 1994, for example, it stated: "ABB is committed to sustainable development. Protection of the environment is among our top corporate priorities. We address environmental issues in all our operations and public policy."²⁵ Or, as company President Goran Lindahl has put it: "We should not sell crap anywhere".²⁶

The company has played — and continues to play — a leading role in the World Business Council for Sustainable Development, an industry initiative to promote environmental "best practice". In 1998, ABB announced its intention fully to integrate its environmental policies "into the strategic plans of our business areas".²⁷ The intention is to "make us better environmental neighbours and help us better meet the environmental demands of our customers and society at large".

ABB claims that, in accordance with its environmental protection policy, "all the work we are doing meets or exceeds local environmental standards and legislation."²⁸ In many instances, however, ABB corporate practice has fallen far short of this standard. Far from meeting or exceeding local environmental standards, many ABB projects have involved breaches of local environmental laws. In 1996, for example, ABB bid for the contract for the Bakun Dam in Malaysia [see box and below] despite a Malaysian High Court ruling that the environmental impact assessment had been conducted illegally.

In China, ABB has supplied equipment for the Three Gorges dam, despite local officials being regularly prosecuted for corruption over resettlement payments, whilst in India the company is involved in the Maheshwar project where local people have been illegally evicted as a result of the dam.

Meanwhile in Lesotho, the company itself has been accused of bribing local officials in charge of the Lesotho Highland Water Project, where ABB was under contract to supply equipment. In other instances, the company has bid for contracts despite clear evidence that those affected by a project are effectively denied recourse to the law in the event of human rights abuses. The company has also been fined for breaking local environmental laws in Poland: at one ABB factory, in Elbag, polluting emissions were found to be two to three times higher than the norm in Poland — and 20 times those from Swedish factories.²⁹

The company states that it welcomes debate with environmental groups because "it forces people to sharpen their arguments, so we will find better solutions for processes and projects."³⁰ ABB also stresses the need for consultation with those affected by its projects. The company is committed, for example, to "communicating openly with interested parties, in the communities and countries where ABB operates as well as internally about its environmental performance." Here too, however, the company’s record is seemingly at odds with its rhetoric. Requests by affected communities or concerned NGOs to meet with company officials to discuss the Bakun and Three Gorges projects — two of the most controversial dams in which ABB has been involved — have been rebuffed [see below, and boxes on Bakun and Three Gorges].

Environmental Degradation As Business Opportunity

One of the first companies in Europe to realise the business opportunities of environmental degradation, ABB has positioned itself to take advantage of international agreements aimed at reducing impacts on the environment. ABB’s 1997 Annual Report, for example, highlights the implications of the Kyoto Agreement on reducing greenhouse gases for ABB’s markets and stresses the promises which the Agreement holds for the company: "By pushing industrialised countries to reduce greenhouse gas emissions, and urging developing countries to continue infrastructure development without compromising environmental standards, the agreement promises to increase demand for ecoefficient technologies — one of ABB’s strengths."³¹

The company has also been in the forefront of promoting "carbon-offset trading". In conjunction with two Norwegian companies — Kvaerner Energy and EEG-Henriksen — ABB Kraft is collaborating with the state-owned power utility in Costa Rica in planning the construction of a small hydropower plant on the Virilla River. The dam is being developed as part of a "carbon-credit scheme" whereby the carbon emissions "saved" by replacing diesel-generated electricity by hydroelectricity will be traded with the Norwegian companies. The companies would be "free to sell them to other Norwegian companies in need of reducing their own carbon dioxide emmission quotas or to other buyers on an international emissions trading market"³². Commenting on the scheme, ABB’s 1998 Environmental Management Report notes: "As electrical partner in the project consortium, ABB is taking a lead role in this entrepreneurial venture, which could serve as a model to the rest of the world as one of the first applications of the new Clean Development Mechanism covered by the Kyoto Protocol."³³

Critics of such emissions trading argue that it threatens the gradual privatisation of the atmosphere, as companies buy up the right to pollute, at the expense of poorer groups in the South who must bear the social and environmental brunt of dams and other schemes aimed at reducing carbon emissions. Mean-while, the North continues its emissions unabated.³⁴

ABB On Dams

ABB has supplied some 2,200 generators for hydroelectric dams — generating approximately 150,000 MW, or one-fifth, of the world’s installed hydropower capacity.³⁵ International criticism of ABB’s involvement in projects such as Bakun and Three Gorges has made the company defensive of its hydropower division. Since 1996, the company’s annual reports and environmental management reports have regularly carried large sections on the issue of dams.

ABB acknowledges that dams have major environmental and social impact, which have not been "fully anticipated or appreciated" in the past. It also argues that future dam projects should "include provision for prompt and permanent improvements in the quality of life for all people affected by the dam."³⁶ However, it has thus far failed to acknowledge its own role in the environmental and social destruction caused by past dams: on the contrary, when pressed, it has sometimes tended to cast itself as a bit player with little real influence. As an equipment supplier, its argues, the company is drawn into these debates but "ABB cannot directly influence decisions on dam-building."³⁷

Elsewhere — and somewhat schizophrenically — the company suggests that its ability to influence the outcome of projects — if only through the technologies it manufactures — is a prime reason why it should be involved in those that are most controversial. "If a company like ABB refuses to involve itself in a project because of its adverse social or environmental impact, that refusal will probably not result in the cancellation of the project", it states. "Indeed, it may result in the project’s being carried through using suppliers with less concern for environmental impact than ABB".³⁸ And again: "There are ways to minimize the adverse impacts of large dam projects on people and the environment and the technologies ABB provides are an important component in these."³⁹

Discussing the problems of resettlement, for example, Michael Robertson of ABB’s Environmental Affairs Department has said: " All issues relating to resettlement of people affected [by dams] are clearly a matter for the local authorities and the national governments. However, ABB does what it can to ameliorate resettlement problems on projects where it has a major role. In the case of Bakun, we visited the affected Longhouse people and had discussions with their representatives. For Three Gorges, we will consider siting new factories in areas designated for the resettled people."⁴⁰ [For a discussion of the outcome of the resettlement programme at Bakun, see box on the Bakun dam].

ABB insists that "it has no commercial interest in promoting hydropower over other sources of energy." It points out that, "in terms of ABB added value-per-MW, thermal power plants rank much higher than hydropower." The company believes, however, "that hydropower should remain on the menu for our customers, if and when the environmental and social issues can be addressed."⁴¹

The claim is somewhat disingenuous, however, since it is clear that, whatever its added value per MW, hydropower development frequently provides the company with a way into new markets, with substantial knock-on benefits for the company. In the case of Three Gorges, for example, ABB’s hope is that Three Gorges will lead to other large dam contracts in China and elsewhere in the region. Paul Chan, ABB’s Senior Vice-President for China, has described the Three Gorges contract as a "worldwide entry ticket for the next two decades to large-scale hydropower projects".⁴²

ABB and The World Commission On Dams

ABB is an enthusiastic supporter of the World Commission on Dams and has contributed financial support. Goran Lindahl is a commissioner.

Discussing the Commission and ABB’s role in it, Michael Roberston of ABB’s Environmental Affairs Department, says: "Care for the environment is an ABB core policy and we look forward to working towards a consensus on the role of large dams in sustainable development. A positive outcome will include guidelines for environmental issues which can certainly help the industry to improve its image."⁴³

In an interview with the Brazilian newspaper Folha de Sao Paulo, Lindahl has similarly outlined his hopes for the Commission: "The question is how to construct dams in such a way as to cause minimum impacts to the environment and the lives of people. The challenge is to balance the search for income with the preservation of these concerns. In this sense, this Commission is unique. For the first time, representatives of society, companies, governments and multilateral agencies are sitting down at the same table."⁴⁴

ABB is looking to the Commission to break what it views as a political "deadlock" over dams. "What is needed . . . is a set of policy guidelines, agreed upon by all interest groups, to be used as criteria for judging whether future dam projects should go ahead."⁴⁵

ABB itself has proposed that a possible guideline for "measuring the environmental efficiency of a large dam" is "to calculate how many people must be resettled per MW of power."⁴⁶ On this basis, Nepal’s Arun III dam (which was cancelled following popular opposition) would be ranked as more acceptable than, say, China’s Three Gorges, since it would have displaced two people per MW as against 71 people.

Critics of this "body count" approach to energy planning argue that it is dehumanising and (perhaps intentionally) fails to engage with the social and economic conflicts that underlie opposition to dam projects. ABB argues, however, that "quantifying the environmental effects of large dams is not an easy task — but the effects must be quantified to permit meaningful comparisons with the alternatives."

Shareholder Concerns

Already, concerns over ABB’s involvement in dams has led to it being excluded from the portfolios of almost all ethical investment funds, which is unusual for a company with an ISO 14000 international industrial quality standard. In 1998, only one of 11 ethical funds in Switzerland held ABB shares — and it reduced its holdings following the debacle over Bakun. Although rated positively in a January 1998 Ethical Performance Report by VTZ-Delphi, a Swiss financial institution, ABB’s record on dams dragged down its overall rating. The report was particularly critical of ABB’s failure to meet with NGO critics of Bakun, charging ABB with showing "an inflexible and patronising" attitude, especially to the dam-affected peoples.⁷⁷

The company’s involvement in large dams — and its high public profile — have now made it a prime target for environmental and human rights groups campaigning on dam and development issues. A report by the Berne Declaration, a Swiss NGO, prepared for shareholders, warned: " The danger for the ABB group as a whole is that opposition to its hydro activities will have a spill-over affect on its other business. Investors in the company may also find themselves the targets of secondary boycotts — particularly where they have a household name."⁷⁸

The report also drew attention to "the increasing amount of senior management time which appears to be taken up with hydro issues", to the possible detriment of the company’s affairs as a whole. "The 4-6 weeks of each year which Lindahl will be expected to put into the WCD [World Commission on Dams] indicates just how much of ABB’s senior management time is being taken up with the problems of hydropower, despite it being a relatively small business sector for the group as a whole. Indeed hydropower would seem to be one area where ABB’s strategy of decentralisaton and local management has been abandoned in favour of a high level of commitment from the CEO . . . There is cause for concern that ABB’s senior management is being . . . seduced by dams without concern for the bottom line."⁷⁹

Finally, argues the report, shareholders might question whether continued involvement in hydropower plays to the company’s greatest strength — its proven ability to innovate. Yet, as one Swiss financial institutions points out, the company apparently attaches "low priority to developing renewable energy sources (especially photovoltaics and tidal energy)". Indeed, the company has stated that it is not currently carrying out active research into photovoltaics.

Such antagonism to photovoltaics — given their potential — sits uneasily with Goran Lindahl’s dictum that "innovation must be a core competence". Indeed, says the report, "shareholders may ask whether ABB’s continued commitment to large hydro is not at odds with the President’s view that the company’s future lies in "[shifting] away from just reacting to the present and [working] harder to shape the future, creating tomorrow’s markets, not just competing for today’s."⁸⁰

ABB AND DAMS

THREE GORGES, CHINA

ABB has won two major contracts to supply equipment for the Three Gorges Dam [see box on Three Gorges] and its ancillary infrastructure. In August 1997, the company won an order of $250 million to supply eight generators for the dam. More recently, in April 1999, a second contract (worth $340 million) was awarded to supply two converter stations for a 3,000 MW high-voltage direct current power link to transmit electricity from Three Gorges to the Shanghai area.47 ABB’s bid for the Three Gorges contract was made without any consultation with the company’s panel of environmental advisors, which it supposedly consults on projects with possible environmental impacts.

The dam has meet widespread international opposition. In particular, concerns have been raised over the forced relocation of at least 1.3 million people. ABB acknowledges the concern but argues: "The Chinese government regards resettlement not as a problem but as an opportunity to improve the lives of poor people." Local farmers, however, have complained of widespread embezzlement of resettlement funds by government officials.

ABB’s involvement in Three Gorges has led to a sustained campaign by NGOs in Switzerland and internationally against the company. The company’s failure to consult its environmental advisors before bidding for the work; its refusal to meet with prominent dam critics, such as Dai Qing from China; and its failure to answer media enquiries have all contributed to it gaining an increasingly negative image in the Swiss press. In the six months from July 1997 to January 1998, over 25,000 people in Switzerland sent postcards to the company protesting against its involvement in the project. No replies were received.

XINGO, BRAZIL

ABB supplied hydromechanical equipment for the 3,000 MW Xingo dam, which took seven years to build at a cost of $3.2 billion, twice its original budget.⁴⁸

ITAIPU, BRAZIL

ABB provided electromechanical equipment for the Itaipu dam on the Parana River between Brazil and Paraguay. Itaipu is the world’s most powerful and most expensive dam, mainly due to the staggering level of corruption surrounding the project [see section on Siemens and box on Itaipu dam]. Itaipu drowned a large area of Atlantic forest, the fastest disappearing forest type in Brazil. Many of the 42,000 people displaced by the dam moved to resettlement schemes in Amazonia, with disastrous effects for themselves and for the indigenous peoples and forests of the region. The reservoir has caused the local spread of bilharzia, a debilitating water-borne disease, previously unknown in the area.

TUCURUI, BRAZIL

Tucurui, another dam for which ABB was an equipment supplier, flooded more than 2,000 square kilometres of rainforest, displaced 24,000 people and led to the virtual elimination of several indigenous groups. Rotting vegetation in the reservoir turned its water toxic, creating a serious health hazard both around the reservoir and downstream. The reservoir also provided mosquitoes with an ideal breeding ground, creating a local mosquito plague.

SALTO CAXIAS, BRAZIL

ABB is supplying four 310 MW generators and associated equipment for the 1,240 MW Salto Caxias hydro-power plant, completed in 1999. According to the company, the dam exemplifies how the industry in Brazil has learned from past mistakes. "Serious efforts have been made to minimize both the social and environmental impacts of the dam."⁴⁹

Around 1,200 families were resettled, 858 of whom qualified for a package whereby the dam owner, COPEL, built schools, medical centres, a church, 500km of road, and paid for social and agricultural assistance for three years. Each qualifying family — those with land title — received 40 acres of land, a brick house and a barn. Salto Caxias cost $975 million of which $250 million went towards environmental programmes. According to ABB, "special measures [were] taken to conserve one area of 2,200 hectares of high-grade forest".⁵⁰ In addition, "special arrangements were made for tenant farmers. Some 20,000 ha. of high-quality farming land, within 60-80 km of Salto Caxias, were purchased, and those families that wished to continue farming were allocated on average 25 ha (more than twice the size of their previous farms)."

But there is another side to the Salto Caxias story. Local people had learned to fear the Salto Caxias — the last of five dams on the Iguacu River — because thousands of their neighbours had not been consulted but forcibly evicted to make way for the four earlier dams. COPEL did not agree to an environmental impact assessment until the project was already approved. The EIA was "poor quality" and completed in only 30 days because of "political pressure" from COPEL, which began acquiring land for the reservoir before the study was finished. Moreover, the improvements to the resettlement package came only as a result of public pressure. Indeed, the company agreed to the demands of local people only after much stalling.⁵¹

PANGUE, CHILE

ABB supplied hydromechanical equipment for the Pangue dam on the upper Biobio in Chile [see box on Pangue/Biobio River]. The dam has degraded one of the most scenic rivers in Chile and caused major social problems for the Pehuenche, one of the country’s most isolated indigenous communities. Commenting on the dam in its 1997 Environmental Management Report, the company notes: "Moral, social or environmental imperatives are not necessarily the strongest forces in the world of international finance. For instance, in 1997, the World Bank received a highly critical report on Chile’s 400 MW Pangue hydropower dam, and as a result threatened to foreclose on $150 million of finance for the project. Chile paid off the World Bank loan and refinanced the project using cheaper money, with fewer environmental conditions, from an alternative source."⁵² The report did not mention that ABB was itself part of the project, nor did it discuss what this involvement revealed about the company’s own commitment to "moral, social or environmental imperatives."

ZIMAPAN, MEXICO

Zimapan cost Mexico $830 million — almost twice as much as the preconstruction estimate. Some 2,500 people were displaced by the dam, the World Bank noting that women, children and the elderly were "severely affected" by the resulting "social disruption and economic impoverishment". Waste water from Mexico City flows directly into the dam’s reservoir and has caused severe pollution problems.

GUAVIO, COLOMBIA

It was estimated that 1,000 people would be evicted by this dam: the final figure, however, was 5,500. Most have subsequently suffered economic hardship. Two hundred lives were lost in a landslide during construction of the dam, which cost $2.5 billion — $1.2 billion more than estimated — and took six years longer to build than projected. The dam generates nearly one-fifth less electricity than its supposed firm power production. The World Bank has rated the dam as "not economically viable" [See section on Skanska].

ATATURK, KARAKAYA and ILISU, TURKEY

ABB supplied equipment for the Ataturk and Karakaya dams, which, between them, displaced 80,000 people, the great majority of them Kurds, living along the Euphrates valley. Compensation was considered inadequate to allow the purchase of replacement lands and those without land titles received no compensation at all. The mass displacements have heightened the grievances of the Kurdish people who are pressing for recognition of their cultural rights. The projects also heightened regional tensions with Syria and Iraq, since the dams enable Turkey to control the flow of water to its downstream neighbours.

More recently, ABB Power Generation has won the contract to supply the generating equipment for the planned Ilisu dam in South-East Turkey [see box on Ilisu]. The contract is backed by an export credit guarantee from the Swiss government. The dam will displace 25,000 people, many of whom have already been forcibly removed from the reservoir area as part of military operations against Kurdish groups fighting for their rights. No consultation has taken place with the affected communities and local officials are unaware that the decision has been taken to build the dam.

MAHESHWAR, INDIA

ABB is supplying generating equipment for the Maheshwar dam in India, part of the Narmada Valley Development Project [see section on Siemens]. The dam has provoked mass demonstrations.

Villagers in the area affected by the proposed dam have received almost no information regarding the project. Moreover, the resttlement plan is seriously flawed: the project developer, S. Kumars Power Corporation Limited, claims, for example, that only 13,687 people will be affected when the actual figure is closer to 40,000. In addition, a recent study by the Tata Institute of Social Sciences has revealed that most of the land identified for resettlement will be submerged by the dam’s reservoir.

In October 1999, the Ministry of Environment and Forests stated unequivocally that the State government of Madhya Pradesh and the project authorities had failed to demonstrate the availability of cultivable land for resettlement. Citing the example of Jalud, the first village to be submerged by the dam, the Ministry’s report contrasts the lands that will be lost with the land on offer at the proposed resettlement site:

The report notes that "agriculture is quite impossible" at the new site and that efforts to make it cultivable by importing topsoil are likely to fail. "It is likely that heavy monsoon rains will wash away the soil spread over there and make the soil infertile again. Thus, it doesn’t seem a permanent solution to transform a barren land into a cultivable land."⁵³

In several cases, the land earmarked for resettlement sites is already being used by ethnic minority Dalits and indigenous Adivasi groups. Since these groups are not directly affected by the dam’s reservoir, they do not count as "project affected people". In many instances, they have been forcibly evicted, without due process of law. As environmentalist Heffa Schucking reports for those living at Samraj, the resettlement site for Jalud:

TARBELA, PAKISTAN

Serious technical problems at Tarbela almost led to the collapse of the dam during the initial filling of its reservoir in the 1970s. Remedial work increased the cost of the dam from a projected $800 million to $1.5 billion. Some 96,000 people were displaced by the project and are still fighting in the courts for compensation [See section on Impregilo].

BAKUN, MALAYSIA

ABB and the Brazilian company Companhia Brasileira de Projectos e Obras (CBPO) won the contract in 1996 to manage the Bakun dam project and supply all electrical equipment [see box on Bakun]. The contract included a $3 billion order to supply six 420 MW generators — the biggest order ever received in ABB’s history.⁵⁵ In 1997, the contract was withdrawn from ABB after an acrimonious row with the project developers, Ekran Bhd. Subsequently, the project was suspended, due to in part to the economic collapse in South-East Asia and in part to investor fears over its high financial risks. Despite the severe environmental impacts of the dam, ABB failed to consult with its environmental panel prior to bidding for the construction contract.

Those directly affected by the dam were provided with minimal information about the project; access to the Environmental Impact Assessment was denied; and when they objected to the proposed resettlement plan, they were denounced as being "anti-development". Local community leaders had their passports taken away to prevent them traveling overseas to speak out against the project. Communities were also threatened with withdrawal of state benefits if they persisted in their opposition.

The dam created considerable controversy within Malaysia, where a coalition of some 40 groups formed the Coalition of Concerned NGOs. Despite requests for a meeting, ABB refused to meet with a delegation from the Coalition to receive a memorandum setting out the group’s concerns. Responding to the rebuff, the delegation stated: "ABB’s refusal to even receceive the memorandum shows a tremendous lack of concern for the opinions of the general public. This is a blatant contradiction of ABB’s policy, which says it is committed to communicating openly with interested parties, communities and countries. Today’s incident clearly shows that this is all a farce just like the Bakun Hydroelectric Project."⁵⁶

The NGOs also questioned ABB’s corporate ethics. In particular, they accused the company of "dumping unacceptable technology in Malaysia."⁵⁷ The group went on:

Unsurprisingly, ABB’s involvement in the project led to widespread international protests, including demonstrations outside ABB’s London offices. In a series of letters to Percy Barnevick, then chief executive officer of ABB, representatives of the communities affected by the dam, Malysian NGOs and over 200 international environmental and human rights groups expressed their "strongest objection against the involvement [of ABB] in the implementation of Bakun Dam" and urged the company to withdraw. The letters variously charged the company with double standards (building a project that would not be permitted in its own home country) and with breaking its own commitments to sustainable development and transparency.

The collapse of the Bakun deal in 1997 severely dented ABB’s financial reputation. The immediate impact of the loss of the construction contract was a write-off of $100 million in the company’s third quarter results. In terms of market share, ABB slipped from first to third place in the hydro generator market for the world’s largest projects, behind its rivals, General Electric and Siemens.⁵⁸

The withdrawal also raised concerns within the financial community about the health of the large dam industry as a whole. As Frederick Hasslauer, an analyst at Bank Sal. Oppenheimer, told the Wall Street Journal in the immediate aftermath of the Bakun debacle:

BATANG AI, MALAYSIA

ABB supplied equipment for the Batang Ai dam in Sarawak, built in 1975. The Asian Development Bank funded the project. The ADB has described the resettlement of 2,800 Ibans by the dam as an example of a "culturally sensitive and economically sound programme" because "the policies and plans . . . were carefully investigated and prepared."⁶⁰ Others, however, are more sanguine. As Marcus Colchester, Director of the UK-based Forest Peoples’ Programme, notes in a review paper commissioned by the World Commission on Dams as part of its assessment of the impact of dams on indigenous peoples:

The State-owned Sarawak Land Consolidation and Rehabilitation Authority (SALCRA) ran the plantation on which the Iban were resettled. Women suffered disproportionately from the resettlement procedures. According to a study by Hew Ching Sim:

Compensation, which should have been paid to both men and women as co-owners of the land, was only paid to male "heads of household". As Marcus Colchester recalls:

BHUMIPHOL, THAILAND

In 1995, a consortium consisting of ABB Power Generation and Kvaerner Energy won the contract to supply and install pumping and generating equipment for an eight-unit at the 535 MW Bhumiphol hydropower facility on Thailand’s Ping river.⁶⁴ The project was part of a scheme to upgrade and expand the dam, which has been plagued by problems since it was commissioned in 1964 [See sections on VA Tech and Kvaerner].

SONG HINH, VIETNAM

ABB Generation was one of five companies which received contracts to supply hydromechanical equipment for the Song Hinh dam in Vietnam. The company teamed up with Kvaerner Turbin to win the $35 million contract which involved the supply of turbine and generator equipment for the 70 MW dam.⁶⁵ ABB also arranged concessional funding from the Nordic Development Fund for the project. The dam caused the forced relocation of 1,732 people: no consultation was undertaken and compensation was inadequate [See sections on Kvaerner and Electrowatt].

THEUN HINBOUN, LAOS

In 1995, ABB Generation was awarded a $30 million contract, involving the supply of two 105 MW generators, for the Theun Hinboun dam in Laos.66 Under the contract, ABB also undertook installation and commissioning of the equipment and training of power station operators.⁶⁷

Critics of the dam argue that it will completely dry out 40 kilometres of river downstream for most of the year and cut off 70% of the downstream river flow for 140 kilometres. There are fears that the dam will also prevent fish from migrating, breeding and spawning in an area once rich in fish species. A review by Norwegian government agencies of the environmental assessment for Theun Hinboun found it to be severely flawed and biased. The 5,000 people who may lose farming land and fisheries to the project were never informed about the project, still less consulted about its construction [See section on Electrowatt].

HOUAY HO, LAOS

In 1996, ABB Power Generation and Sulzer Hydro [see section on VA Tech] won a $18 million order from the South Korean Daewoo Corporation to supply two generators and electrical equipment to the 170 MW Houay Ho Dam in Laos.68 ABB’s share of the contract was approximately $11 million.⁶⁹ Houay Ho is the centrepiece of a trans-basin water diversion scheme in southern Laos. The dam, developed by Daewoo, was completed in 1998.

The environmental assessment for Houay Ho was not completed until the dam was well under construction. It has yet to be made public. World Bank sources claim that serious financial irregularities surrounded the signing of the contract between the Lao government and Daewoo. The same sources indicate that the contract is extremely unfavourable to the Lao government which will receive a negligible return from the dam.

Conditions among the 800 ethnic minority Nya Heun families displaced by the dam are reported to be appalling, with people suffering from a severe lack of food, a shortage of arable land and insufficient clean water.⁷⁰ A researcher who visited the Houay Ho resettlement site in February 1998 found "a sense of anger, frustration and desperation among many of the Nya Heun villagers interviewed."

The initial feasibility study estimated that each family would need three hectares of non-paddy land for self-sufficiency, but noted that only one-third of that amount was available. While provincial officials claim that there is "plenty of land", villagers interviewed at the site report that all they had were small plots of land adjacent to their houses. Additional land for growing coffee had been promised but this has been "delayed". No land for growing a subsistence rice crop was available. Many families have now left the relocation site and have tried to move back to their former villages — but the Lao authorities do not tolerate this.

One elderly woman interviewed in February 1998 said: "We don’t know . . . we feel we have been lied to . . . If we were lowland Lao it might be different but they don’t care about the Nya Heun people . . . We cannot go on like this or we will die . . . We can’t survive at Bat Chat San but we are also not allowed to return to live here . . . so we don’t know what to do . . . It will be the end of the Nya Heun people."⁷¹ Those resettled also suffer from inadequate water supplies. Most of the wells drilled at the site are either dry or contain water of poor quality. When visited in 1997, 42 families were found to be depending on one shallow well for drinking water.⁷² The provincial office of the Attepeu Lao Women’s Union has reported that 15 women displaced by the dam have become prostitutes for the workers at the construction site. This is the first time that prostitution has been recorded in the area [See section on Electrowatt].

MUELA DAM, LESOTHO

In 1993, ABB was awarded the contract to supply three generators for the Muela dam, part of the Lesotho Highlands Water Project [see box on Lesotho Highlands]. In November 1999, the company was charged paying bribes to the project’s chief executive. ABB is working with the Lesotho authorities, "supporting their investigation". In August 1999, Goran Lindahl, ABB’s Chief Executive Officer, told the Brazilian newspaper Folha de Sao Paulo:

PANGANI, TANZANIA

ABB Energy was one of several Norwegian hydro-power companies to receive contracts for services and equipment to the Pangani Falls Redevelopment Project in Tanzania. The project entailed the rehabilitation of an existing hydropower station and the construction of a modern underground power station, which would increase output by 66 MW.⁷³ The work was projected to cost $128 million and was funded by Norwegian, Finnish and Swedish bilateral aid agencies.

Due to the extraction of water for irrigation upstream, there are major doubts that water flow during the dry season will be sufficient to operate the plant at full capacity. The feasibility study, undertaken by IVO-Norplan, failed to examine the issue of water availability, however, leading to severe criticism from the Finnish aid agency, Finnida. An internal memorandum written by Karl Silfverberg, environmental advisor to Finnida, states:

In an attempt to resolve the problem, the donor agencies put pressure on the Tanzanian government to introduce water charges for irrigation. By 1996, control over water usage upstream had been made more or less a condition of further development aid from Norway’s aid agency, NORAD. Other proposed "solutions" include the building of a further dam upstream to store water.

CIECHOCINEK, POLAND

At the beginning of 1999, ABB Zamech (now part of ABB Alstrom Power) and Elektrim — Poland’s largest company — formed a consortium to build the Ciechocinek dam on the Vistula river in Poland. The dam is intended to mitigate the severe environmental damage that has already been caused by an earlier dam at Wloclawek. The river bed downstream from Wloclawek has been eroded by three metres and the area immediately behind the dam is heavily polluted with 29 years of untreated city, town and village waste and industrial chemicals. According to Klub Gaja, a Polish environmental group, "This sediment is highly toxic and is in some places 3-5 metres deep."⁷⁵

Ciechocinek is one of a number of proposals being considered by the Polish authorities, which argue that the new dam is needed to check erosion and prevent Wloclawek from collapsing. Other proposals include the building of a cascade of seven dams along the Lower Vistula.⁷⁶ Environmental groups are pressing for the decommissioning of Wloclawek and the ecologically-sensitive development of the Vistula Valley. The Vistula river, known in Poland as the "Queen of Polish Rivers", is one of Europe’s largest rivers and is renowned for its unique and rare habitats. Ecologically, the river forms an important corridor, linking the Dniestre Basin and the Danube.

ABB: DAMS AT A GLANCE

BANGLADESH

Karnafuli dam. ABB and Voest-Alpine manufactured and supplied the original electromechanical equipment for the Karnafuli dam in South-Eastern Bangladesh. In 1998, ABB SAE Sadelmi (Milan) won the contract, in partnership with Voest-Alpine, to refurbish the dam.

BRAZIL

Ita dam: ABB is part of CONITA, the consortium which won the contract to build and operate the Ita Dam, currently nearing completion on the Uruguay River [see section on Coyne et Bellier]. Itaipú, Salto Caxias, Tucuruí and Xingó dams [see main text for all].

CHILE

Pangue dam [see main text]. Aconcagua dam: contract awarded in 1991 by HASA for supply of one generator. Curillinque dam: contract awarded in 1992 by Pehuenche SA for supply of one generator. El Toro dam.

CHINA

Yele dam: in October 1999, ABB Alstom Power signed a contract worth around 35 million Euros with the China National Machinery Import and Export Corporation to supply equipment to the Yele hydroelectric power plant. Also involved in the Guandong, Pan Jia Kou and Shi Lou Ti dams.

COLOMBIA

Guavio dam. [See main text].

COSTA RICA

Virilla dam.

ECUADOR

Papallacta and Chimbo dams.

ETHIOPIA

Finchaa dam, commissioned by EELPA in 1969.

INDIA

Uri dam: contract in 1990 by National Hydroelectric Power Corporation (NHPC) to supply four generators for Uri Dam. Maheshwar dam [see main text and section on Siemens]. Naptha Jhakri [see box on Naptha Jhakri]. Rajhat dam: contract awarded in 1992 by Madhya Pradesh Electricity Board for supply of three generators. Rangit: contract awarded in 1991 by National Hydroelectric Power Corporation for supply of three generators. Sharavathy: contract awarded in 1992 by Karnataka Power Corporation Ltd for supply of two generators. Kalinadi Stg. 1 (Nagjhari): 1992 contract for one generator.

LAOS

Theun-Hinboun and Houay Ho dams [see main text].

LESOTHO

Muela dam [see main text]. Also involved in the Mantsonyane, Orange/Senque and Semonkong dams.

MALAYSIA

The Pan Jia Kou, Batang Ai, Batangui and Perak dams.

MEXICO

Zimapan dam: contract awarded in 1991 by Commission Federal de Electricidad for two generators.

MOZAMBIQUE

Cuamba and Lichinga dams.

NEPAL

The Khimti Kola dam [see section on Kvaerner], and the Jhimruk dam.

NORWAY

Hekni: contract awarded in 1992 by Aust-Agder Kraftwerk for supply of two generators. Bortveit: contract awarded in 1992 by Sunnhordland Kraftlag for one generator. Hogstad: contract awarded in 1992 by Vestfold Kraftselskap for supply of one generator. Kopa: contract awarded in 1992 by Volda Komm. Elverk for supply of one generator. Nomeland: contract awarded in 1992 by Kristiansand Elverk for supply of one generator. Skjaerlivatn: contract awarded in 1992 by Sor-Trondelag Elverk for one generator.

PAKISTAN

Tarbela dam [see section on Impregilo].

PAPUA NEW GUINEA

Warangoi dam.

PERU

Carhuaquero dam: ABB was the lead contractor for the electromechanical equipment for the 75 MW first stage of the 125 MW Cahuaquero project on the Chancay river. The dam was commissioned in 1991. Skanska was the lead contractor for civil works and Kavaerner Brug A/S of Norway supplied the turbines.

PHILIPPINES

The Janopol and Magat dams.

PORTUGAL

Alqueva dam: ABB SGPS SA of Portugal won a $58 million in 1997 from EDIA Empresade - Desenvolvimento e Infrastructuras do Alqueva SA to supply electrical and mechanical equipment for the Alqueva dam on the Guadiana River in southern Portugal.

SPAIN

Agavanzal: awarded contract in 1992 by Iberdola for three generators. Asma: awarded contracts by Navarro in 1992 for generators. Cordinanes: awarded contract by Navarro in 1992 for two generators. Mandeo-Zarzo: awarded contract by Navarro in 1992 for two generators. Pontelinares: awarded contract by Enorsa in 1992 for two generators. Soutelo: awarded contract by Iberdrola in 1991. Talave: awarded 1991 contract from Idea for two generators.

SWEDEN

Alfta dam: awarded contract by Voxnans Kraft AB in 1993 for two generators. Gideabacka dam: awarded contract by Gidekraft AB in 1994 for generator. Klippen dam: awarded contract by Vattenfall in 1991 for generator.