Arun III loan scrapped

A historic victory was achieved by Nepal's environmentalists and citizens' groups, when the World Bank announced on August 4 in Washington DC, that the proposed Bank loan to Nepars Arun IH dam project, which was cleared earlier, would be scrapped. Gopal Siwakoti of the Arun Concerned Group in Nepal said, "it is...a crushing defeat for the World Bank's management. We support smaller, cheaper, less damaging, and more efficient hydrodams."

Lori Udall of the International Rivers Network says that the Bank's decision "sends strong signals to other aid donors that large dams are risky, expensive and destructive investments". The Arun III, which had been opposed on socio-cuttural, environmental, economic and technical grounds, was claimed by the critics as having a higher cost per kilowatt- hour than alternative smaller hydel projects.

Originally, the Bank would.have had approved the project in August 1"3. but for pressure from Nepalese and international activists who charged that the Bank had failed to comply with its policies regarding environmental assessment involuntary resettlement and indigenous peoples. The review panel of the Bank had concluded on June 22 that remedial measures appeared adequate enough to bring the loan into compliance. However, Nepalese activists' pessimist world view considered it highly unlikely that these measures would have been successfully Implemented.