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July 19 (Bloomberg) -- The European Investment Bank said it has stopped funding environmental and social impact studies for the Gibe III hydroelectric dam project in Ethiopia.

The Luxembourg-based bank made the decision after alternative funding was found, the EIB said in an e-mailed statement today. In the past, the bank has funded preliminary studies designed to help a group of donors determine whether to finance dam-building, the lender said.

The EIB stopped funding the studies due to the alternative financing and not because of the “results of these preliminary studies,” it said.

A Kenyan conservation organization, Friends of Lake Turkana, on June 14 filed a court case against the government and Kenya Power & Lighting Ltd., arguing that environmental and social concerns had been disregarded when they decided to buy power from Gibe III.

Residents and pastoral communities living along the Omo River, where the dam is situated, and at Kenya’s Lake Turkana, which the Omo River flows into, will face water shortages, harming fishing and farming, the organization said.

Other conservation groups, including London-based Survival International and International Rivers, based in California, have called on the African Development Bank, the European Investment Bank, JPMorgan Chase & Co. and other financiers not to fund the 1.5 billion-euro ($1.95 billion) Gibe III project.

Italy’s Salini Costruttori SpA is working on the dam with financing from the Ethiopian government. Once completed, the 243-meter-high (797 feet-high) dam will generate 1,870 megawatts of electricity, more than doubling Ethiopia’s current power capacity, according to the Ethiopian Electric Power Corp.

To contact the reporter on this story: Sarah McGregor in Nairobi at

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at

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