Independent Investigative Mechanism
YACYRETÁ HYDROELECTRIC PROJECT
REPORT OF THE REVIEW PANEL
General Considerations
Compared with other major hydroelectric works, the Yacyretá hydroelectric project is transforming
its surroundings to an extraordinary degree. Unlike dams thrown across closed canyons (e.g., Itaipú)
or built in remote, unpopulated areas, Yacyretá floods an extensive territory that includes farmlands
and significant portions of towns in Argentina and Paraguay. These effects and their social and
environmental implications have been difficult to control and mitigate.
At the time when the project was designed, the predominant technical approach to hydroelectric dams
assigned priority to maximum energy output, and largely ignored social and environmental
implications. The basic studies were confined to the civil engineering works and an analysis of the
economic components. Under this approach, according to the EBY officers themselves, the Yacyretá
hydroelectric power station was not optimally designed or sited from the social or environmental
standpoint.
Completion of the civil works in 1992 and filling the reservoir to the 76-meter level did not put an
end to the controversies that surrounded the project. To the contrary, because of the specific nature
of many of its implications and the delays and problems encountered in the resettlement and environmental mitigation
programs, many of the affected families continue to express a high degree of
dissatisfaction and uncertainty about the project.
The World Bank and the IADB have made several loans to the Argentine government and EBY,
respectively, for the civil works and resettlement and environmental mitigation programs. With the
help of these loans EBY has completed most of the civil works and made remarkable progress in one
of the most ambitious resettlement and environmental mitigation programs in the history of Latin
America. Nevertheless, owing to a variety of circumstances, a good part of those programs has not
yet been brought to satisfactory completion. Some current problems have been generated by the
filling of the reservoir to the 76-m. level, and others relate to the possibility of filling it to the level
of 83 a.s.l. initially called for.
The Project and Operations in Progress
The Yacyretá hydroelectric project is covered by the Treaty of Yacyretá, which was signed between
the governments of Argentina and Paraguay on December 3, 1973. Its origins, however, date back
to an Argentine-Paraguayan protocol signed in 1926 on use of the Apipé rapids. In 1958 a Mixed
Argentine-Paraguayan Technical Commission was set up to perform studies. The detailed design of
the project was completed in 1978 and the civil works were begun in 1983. The original design
underwent several changes. In 1986, for example, works that would have operated more than 20
turbines were eliminated to reduce costs. In 1994 it was decided to commence operation at a water
level below the originally provided 83-meters. The Yacyretá Binational Entity (EBY), created by the
aforementioned Treaty of 1973, has been in charge of executing the project.
The purposes of the project are to produce electric energy, improve navigability, reduce the effects
of periodic flooding, and build a potential for irrigation in both countries. The Yacyretá dam has been
built across the Paraná river 90 kms downstream from the towns of Encarnación, in Paraguay, and
Posadas, in Argentina. The dam is 66 kms long and forms a lake of 1,650 km2. The principal civil
works include a powerhouse with an installed capacity of 2,700 MW, which will be fitted with 20
turbines; one navigation lock for vessels of up to 12-meter draft; and civil works for resettlement of
the population displaced by the reservoir. A variety of environmental and social action programs are
envisaged under the heading of complementary works.
The investments made to this date are estimated at more than US$5,500 million so far, financed
mostly by the government of Argentina with the support of the World Bank and the IADB. The
World Bank has provided a total of four loans totaling US$1.038 million, and US$966 million already
disbursed.
The IADB approved and disbursed loans 346/OC-RG for US$210 million in 1978; 555/OC-RG for
US$250 million in 1988, and 583/OC-RG for US$250 million in 1989. Loan 760/OC-RG, for
US$130 million, was approved in 1993 but at this writing has not been disbursed. The borrower for
the IADB loans is the EBY.
The operations in progress are grouped under the three following programs.
Actions Pending at the 76-Meter Level
The filling of the reservoir began in mid-1994, when most of the civil works had been completed.
Several resettlement and environmental mitigation operations remained pending, however, and should
have been completed before the 76-m. level was reached shortly afterwards. These operations are
the construction of housing for additional families on either bank, compensation for small brick-makers, the construction of
community infrastructures (water supply, drainage and sewage works,
and electric power). The cost of these operations comes to US$16.1 million, put up entirely by
EBY. These works are scheduled for execution in late 1997, three and a half years behind the original
schedule.
Basic Program
The Argentine economic crisis that began in late 1994 led the country to reduce and eventually to
suspend its financing of the project while privatization alternatives were being considered. As a
result, the two governments decided to keep the reservoir level at 76 a.s.l. It then became necessary
to deal with the negative impacts generated by the decision to keep the reservoir at that level for
longer than initially envisaged. The immediate negative impact has been a deterioration of sanitary
conditions in urban areas in the reservoir's vicinity and the lower reaches of the creeks and canals that
flow into it because of the rising of the water table. This situation becomes worse when the river
periodically overflows its banks.
The Basic Program was drawn up in February 1997 to mitigate the social and environmental effects
on the population in the zone between elevations 76 and 78 a.s.l. Its cost is US$107.6 million (Annex
2), which is financed by internal resources of EBY (obtained from its energy sales), funds supplied
by the World Bank and the IADB, and a commercial loan obtained by EBY. The components of the
Program are (i) provision of drinking water supplies during construction of the housing units; (ii)
relocation of the population living in the indicated zone; (iii) continued laying of sewer pipes and
interceptors and sewage treatment plants, and (iv) relocation of slaughterhouses, which are sources
of heavy pollution. The Program also provides measures to control squatting in areas to be flooded
by the reservoir.
This Program can scarcely be evaluated on the basis of disbursements of less than 2% in June 1997.
It should be noted, however, that, apart from its social and environmental aspects, it makes no provision for treatment of the
banks of the reservoir, which was not foreseen to remain at the 76-meter
level indefinitely. It may be noted that there are critical areas on which consultations will have to be
held with the population concerned, such as the siting of the sewage treatment plants, control of
invasions of the vacated areas by new families, indemnification of several resettled groups, and
decisions on alternative ways of managing the Aña Cuá channel.
Additional Plan
The Additional Plan provides for some activities that were not part of the Basic Plan, including the
construction of 175 housing units for the families counted on the right bank between the 78 and 79-meter levels which suffer
the effects of periodic flooding.
Environmental and Resettlement Program
The Environmental and Resettlement Program was drawn up to meet the need for broader coverage
of the social and environmental aspects of the project and because EBY had been unable for a variety
of reasons to execute effectively the environmental and resettlement aspects, which under the earlier
IADB loan contracts had to be financed with local funds.
The Program would consolidate and carry out the Master Environmental Management Plan (PMMA)
and the Plan of Action for Resettlement and Rehabilitation (PARR),(1). The purpose
of the PMMA
is to provide mechanisms that will help prevent, control, minimize and compensate for damage to
ecosystems and communities and to protect areas of high ecological, social and cultural value in the
project's area of influence. The PARR is intended to safeguard and improve the quality of life of the
populations concerned.(2)
The Program has the following components: (i) resettlement of more than 10,000 families displaced
by construction of the project, including the relocation of public facilities, commercial premises,
industrial establishments and social development operations, (ii) relocation of infrastructure works
to be flooded by the reservoir, such as roads, railroad tracks, ports, an airport, and communications
and electric power systems, (iii) works and measures for the prevention and mitigation of the project's adverse environmental
impacts, (iv) payments of indemnification and purchases of land for
resettlement purposes, and (v) works to protect the Aguapey arroyo and the town of Carmen del
Paraná, in Paraguay.
The current cost of the Program is estimated at US$901 million (Annex 2), financed mostly with local
funds and cofinanced by the IADB (US$130 million) and the World Bank (US$62.3 million). Most
of the Program's resources are intended for activities in connection with the filling of the reservoir
up to the 83-meter level.
The IADB's cofinancing (loan 760/OC-RG) has not yet been used owing to failure of compliance with the established agreements on availability of the local counterpart funds and to delays in the execution of the water and sewerage works for the communities in the area. Fulfillment of the conditions necessary for the first disbursement was greatly delayed. At this writing, a consulting firm must still be engaged to supervise the works, audit the Basic Plan, and design the execution of needed projects up to the 83-meter. So long as the substantive problems that have delayed execution of the Project have not been resolved, this Program will remain suspended.
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