THE KARIBA DAM IMPACT OF THE FAILURE OF - THE INSTITUTE OF RISK MANAGEMENT SOUTH AFRICA - Aon South Africa
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IMPACT OF THE FAILURE OF
THE KARIBA DAM
THE INSTITUTE OF RISK MANAGEMENT SOUTH AFRICA
RISK RESEARCH REPORT
Safety and reliability
of the structure
Political & Economic
stability
Kariba Dam opened
1959 Hydro Electric capacity
stabilised
Extend life of the dam for a further
100 years
still needs maintenance
Impact
Badly in need of repair lack of maintenance on other investments &
56 years later projects in the region
Project delay from
- Flooding
Problem identified - Skills
10 years ago - Governance
- Funding
Next 3 years are critical
Zambezi River Authority (ZRA)
Manage the dam - Zambia & Zimbabwe
Reputation Region
- ZRA
Electricity generation - Advisers
Hydro power - Funders
40% of the - Nation
region’s
capacity
Funders
40%
- World Bank
- African Development Bank
- European Union
Challenging project
Climate change,
Rainfall patterns,
$294,2m
Skills availability,
Flooding, Drought
other projects in the
region
Electricity
Revenue Terrorism
Population of the region under review (2011)
116 million
Botswana - 1,8m
Malawi - 14,4m
Mozambique - 23,0m
South Africa - 50,6m
Zambia - 13,4m
Zimbabwe - 12,8m
2 IRMSA - Aon Risk Research Report | June 2015
Risk - from which perspective?
- National, Regional, Investors, Existing industries
- Individuals, Communities, Environmental, Flora and Fauna
- The World, travel, tourism
Build-up to event
- Rainfall in Zambezi catchment area - past 2 years significant in January
- Management of water in Kariba Dam
- Release of water through floodgates (if they work)
- Dam can’t cope
- Warning of potential collapse, evacuation downstream
- Media, Cellphone companies, TV, Twitter, Facebook ...
- Animals
The Event and the Impact ...
Tsunami like wall of water released downstream
4 x bigger than the largest on record
181 billion cubic metres of water from the full Kariba Dam
3.5 million lives at risk
8 hours to reach Cahorra Bassa
Tete wiped out after 10 hours, population 1.8 million
Electricity supply lost - 1,500 megawatts in South Africa
Impact to 30 million people for their basic needs
Animals - Crocodile, Hippo, Fish
Lack of water, waterborne diseases
Food shortages
Agriculture restricted
Access to region impacted
Travel curtailed, border management
Disaster relief, funding
Economic impact unknown
Debt repayment curtailed
Upstream and downstream impact - Kariba Dam water unavailable
Post Event and the Future ...
2065 - 50 years later
5 - 8 years to rebuild Kariba and Cahorra Bassa Dams
Poverty, Food security, on-going support
Water build up in the dams necessary for hydro power - climate change?
Other technology options for power
Funding of replacement dams
On-going maintenance
Eventual de-commissioning
Other dams in the region - what is their status?
IRMSA - Aon Risk Research Report | June 2015 3
The Institute of Risk Management South Africa
Risk Research Report
Impact of the failure of the Kariba Dam
Completed June 2015
Sponsored by Aon South Africa
Researched and written by Kay Darbourn
Contents Page
About IRMSA 5
1. Preface 6
2. Foreword 7
3. Executive Summary 8
4. The Kariba and Cahora Bassa Dams and the Zambezi River 11
5. The Problem and the Kariba Dam Rehabilitation Project 16
6. Risks and Opportunities 19
7. Risk Management 40
8. Conclusion 41
9. A personal observation 42
10. Disclaimer 42
11. References, links and documents used in this report 43
12. Acronyms and abbreviations 44
13. Support from IRMSA members 45
14. Support from other entities and individuals 45
15. About Aon 47
4 IRMSA - Aon Risk Research Report | June 2015
About IRMSA
The Institute of Risk Management South Africa Offering both individual and corporate
(IRMSA) is the Professional Body for Risk memberships, IRMSA assists organisations in
Management in South Africa. IRMSA represents ensuring their employees become professionals
individuals and companies committed to the and are supported in their growth and
enhancement of the risk management discipline. development through every stage of their
IRMSA serves aspiring risk practitioners, risk
career. By becoming a corporate member,
professionals and decision makers in Southern
entities can be aligned to a professional and
Africa, dedicated to the advancement of the risk
recognised risk body and can assist, shape
management profession through accreditation,
research, promotion, education, upliftment, and be at the forefront of risk management.
training, guidance and strong relationships
Visit our website - www.irmsa.org.za - or
with other institutes and associations.
give us a call on +27 11 555 1800.
IRMSA is the leading source of information
We look forward to a very exciting future
and networking opportunities within the risk
management industry, with members from a wide as the Institute continues on the path as the
range of corporations both from the private and professional body for risk management in
public sector and is the professional body for risk South Africa. The IRMSA team strives to offer
management in South Africa as recognised by the service excellence for members and provide
South African Qualifications Authority (SAQA). value for the membership fees paid.
Knowledge, Service, Prosper
IRMSA - Aon Risk Research Report | June 2015 5
1. Preface
Kay Darbourn is a member of
the Institute of Risk Management
South Africa (IRMSA) Risk
Intelligence Committee, she is
also a Fellow, Honorary Life
member, past President and
founding member of the Institute.
Considerable world-wide media attention was provide this work to our members as examples
given to the possible collapse of the Kariba of how the risk report may be used as the
Dam during the last part of 2014. Most of the base for further investigative risk reviews as
funding has been secured and one high level relevant to specific entities and industries.
executive in an entity that may be significantly
impacted has said “well, now the funding Two of the key risks for the region that were
is in place, we can relax” but can we? considered within the risk report were concerns
related to electricity supply in South Africa and
The Institute of Risk Management South Africa the need for improvements to infrastructure, both
(IRMSA), through its Risk Intelligence Committee, for new projects and the need to maintain existing
completed the first South Africa Risks Report structures. Research around the Kariba Dam was
at the end of 2014 and this was published chosen as our first review and is presented as a
in January 2015. The IRMSA Risk Report story – we ask the question “what if the Kariba
highlighted a number of risks for the region Dam should fail, what would the impact be?”
to consider and reflected on the differences
between IRMSA member’s feedback on key Research was focused on the region that might
risks and those featured in the 2014 World be impacted by the failure of the Kariba and
Economic Forum (WEF) Global Risks Report. Cahora Bassa Dams. The report considers some
aspects of history, current challenges and some
As the IRMSA Risk Report was being finalised, future concerns but is not intended to be a risk
the committee suggested that we might take assessment – we hope that you will take what
some of the risks identified within the report you can from this report, as it might impact
and complete “case studies” which go into you and your company, and continue with
more detail on specific areas of the risks and managing your specific risks and opportunities.
6 IRMSA - Aon Risk Research Report | June 2015
2. Foreword
Aon is committed to offering innovative risk solutions to the
challenges that companies face around the world. Each new piece
of crucial risk information presented places business leaders and risk
managers in a better position to mitigate risks in an informed way.
The failure or shortage of critical infrastructure is amongst the top 10
South African risks identified by likelihood and consequence by both
Aon in its Risk Management Survey 2015 and the Institute of Risk
Management South Africa (IRMSA) in the first edition of their South
Africa Risk Report 2015. The potential failure of the Kariba Dam is a Southern Africa
regional risk that falls into the infrastructure risk category, but in addition it would lead
to power supply constraints – another key challenge currently impacting the region.
Aon is a corporate member of IRMSA and proud to be part of this case study into the
regional risks and consequences posed by the potential failure of the Kariba dam. This report
shows that all of us in Southern Africa will suffer the impact if this risk materialises and calls
for each of us to take an interest and be as involved as possible in preventing this potential
disaster from happening. The impact will span across the entire risk consequence spectrum,
from significant loss of life, damage to property and the environment, to economic fall-out.
This risk and its potential consequences need to be viewed as part of the existing power
supply and demand challenges in the region and will require a strong commitment from
governments, private companies and financiers to prevent the failure from happening.
By providing this information to our clients and other risk managers in the
IRMSA network, we hope to empower you to make the right decisions
with regards to the risks you and your company may face.
Nico Bianco
Executive: Aon Risk Solutions
IRMSA - Aon Risk Research Report | June 2015 7
3. Executive Summary
On 3 October 2014 the BBC reported that:
“The Kariba Dam is in a dangerous state. Opened in 1959, it was built on a seemingly
solid bed of basalt. But, in the past 50 years, the torrents from the spillway have
eroded that bedrock, carving a vast crater that has undercut the dam’s foundations.
Engineers are now warning that without urgent repairs, the whole dam will collapse.
If that happened, a tsunami-like wall of water would rip through the Zambezi
valley, reaching the Mozambique border within eight hours. The torrent would
overwhelm Mozambique’s Cahora Bassa Dam and knock out 40% of southern Africa’s
hydroelectric capacity. Along with the devastation of wildlife in the valley, the Zambezi
River Authority (ZRA) estimates that the lives of 3.5 million people are at risk.”
“Can you answer the following questions Consider the key risks that might influence
please”, said the chairman of your board the likelihood of such a catastrophic
after hearing the news report… event occurring in the next 5 years?
a. What will happen if the Kariba Dam fails? a. Project Delay
b. Will our business and our people In December 2014, the critical period
be impacted and when? was defined as “the next three years” but
the full project is due for completion in
c. What are the key challenges we are 2025. Project delay from any cause will
likely to face should it happen? seriously affect the likelihood of failure.
d. What’s the timeframe around the b. Climate change, unseasonal
replacement of the dams, if Kariba fails? rainfall, drought or flooding
e. Will I be impacted, personally? Rainfall in the region is key to hydroelectric
f. Should we be doing something, and if power generation and the economies
so – what? of the various countries. Revenue from
power generation partially funds debt
Well, can you answer these questions repayment in Zambia and Zimbabwe.
from your company’s perspective?
Flooding in the Zambezi basin may
put additional pressure on the Kariba
Dam necessitating the release of water
through the floodgates and may cause
a delay in the rehabilitation project.
c. Funding for the Rehabilitation Project
Whilst funding has been secured for the
There are many events and causes rehabilitation project, increasing costs
that might lead to the delay of the as a result of global economic factors or
rehabilitation project and these are delays may result in additional costs – will
reviewed in more detail in this report. additional funding be available and will
debt re-payment become an issue?
8 IRMSA - Aon Risk Research Report | June 2015
Chairman, in response to your questions and having read through
the IRMSA Risk Research Report, my immediate thoughts would be:
1. What will happen if the 2. Will our business 3. What are the key
Kariba Dam fails? and our people be challenges we are likely
impacted and when? to face should it happen?
a. The water flow from Kariba
will continue down the a. In terms of our people, we a. Communicating clearly with
Zambezi River, impacting need to consider those that our people, board and
people, property, animals might be working in the shareholders will be key.
and plant life until it area and indeed those that
reaches the Cahora Bassa may have relatives in the b. Our reputation and
Dam at which stage the area that will be impacted. how we manage
flow will cause this dam Travel to the region needs this catastrophe will
to be breeched and the to be re-considered as we support and maintain
cycle of damage will go forward, specifically our share price.
continue downstream. in terms of health risks. c. Alternative sources of
This will occur over a electricity and water might
period of 8 to 10 hours b. We can expect our South
African entities to suffer be costly and scarce,
until the flow dissipates. we may need to secure
from a lack of electricity
b. The reduction in the supply supply, leading to load these in advance.
of electricity to various shedding if our energy d. Our ability to change our
countries in the region supply constraints remain future business strategies
will be significant and as they are currently. quickly will be important.
immediate. Some countries
rely totally on hydropower c. Our investments in the e. Decisions around our
and their economies will be region may be at risk current investments in the
seriously impacted, both although property damage region will need to be
for industries that rely on is unlikely outside the taken as soon as possible
electricity to operate and in flood area. The lack of to avoid unnecessary
terms of revenue generated electricity supply will on-going costs.
from the sale of electricity. lead to a significant loss
South Africa will lose in production. Lack of f. Our corporate social
1,500 MW of imported water may also impact responsibility planning may
power as the Cahora some of our operations. need to refocus around
Bassa Dam fails. how we can support
d. We will need to re-think people in the region.
c. Access to water for our new projects in the
people in the Kariba region as the ongoing lack
and Cahora Bassa Dam of electricity and water will
areas for drinking, food make these uneconomical,
and agriculture will be potentially for five to
severely restricted. eight years. Investors will
also be difficult to tap as
d. Transportation and access they will be more focused
to the areas affected will on repairing the dams
be curtailed, alternative or funding alternative
routes across the Zambezi sources of electricity
will need to be sourced, supply and potentially
leading to increased cost funding disaster relief.
and time for deliveries.
IRMSA - Aon Risk Research Report | June 2015 9
4. What’s the timeframe 5. Will I be impacted, 6. Should we be doing
around the replacement of personally? something and if so - what?
the dams, if Kariba fails?
a. Chairman, your own a. Certainly, we need to
a. Assuming both dams are to personal reputation may consider the potential of
be replaced, funding will be at risk if we have not the failure of the Kariba
be required and overall addressed this potential dam as one of the risks
it might take five to eight exposure adequately. that may impact our
years to re-build the dams, company and complete the
including removal of debris b. Are you involved with necessary risk assessments,
caused by the collapse. other companies that might evaluations and treatment
It is even possible that also be impacted? Are plans as soon as possible.
the location of the dams you on other Boards, do Even if the potential
might need to change you have any personal for such a catastrophe
and environmental factors investments in the region? is unlikely, we need to
will come into play. Do you have any property ensure that our planning
in the region or relatives is flexible enough to deal
b. Rebuilding and re-filling of that might be impacted – with any emerging risk.
the dams would depend you really need to look
on rainfall within the at your own Personal Risk b. We need to keep up
Zambezi River Basin, this Assessment separately to date with how the
could also take some time. from the company. refurbishment of the dam is
going and the current and
c. You may need to re-look ongoing rainfall patterns
the supply of electricity to in the region as this may
your home in Gauteng. impact the time taken for
Load shedding is likely the refurbishment and the
to become more frequent potential for the likelihood
and the cost of gas and of the risk materialising.
other energy sources may This should form part of
increase substantially. our on-going environmental
scanning for our business.
c. We might need to
tap into our networks
and relationships and
ensure that this potential
catastrophe receives the
necessary focus across
South Africa, the region
and indeed the world. Let
it not be said that we didn’t
try to make a difference.
Whether you are a Shareholder, Stakeholder, Board Member, Business Executive,
Risk Manager or even a private individual – if you live, work, own property or
have investments in South Africa, Zambia, Zimbabwe, Botswana, Mozambique
or Malawi the chances are that if the Kariba Dam fails – you will be impacted!
10 IRMSA - Aon Risk Research Report | June 20154. The Kariba and Cahora Bassa Dams and the
Zambezi River
The Zambezi River
The Zambezi River winds its
way through six countries
in Africa, starting in north-
western Zambia and finishing
in the Indian Ocean. The
source lies at about 1,500
metres above sea level in the
Mwinilunga District, very close
to the border where Zambia,
Angola and the Congo meet.
For years the people living along the banks of the The Zambezi River Basin (ZRB) is shared by eight
Zambezi have depended on it for their survival countries, Tanzania and Namibia joining those
and have harnessed its great power for electricity. quoted above. In addition to meeting the basic
needs of more than 30 million people and playing
From its source it then flows through Zambia,
a central role in the riparian economies, the river
Angola, Namibia and Botswana then back
sustains a rich and diverse natural environment.
along the borders of Zambia and Zimbabwe
The Cooperation in International Waters in
finally discharging into the Indian Ocean
Africa (CIWA) Zambezi River Basin program of
at its delta in Mozambique. The area of
the World Bank (WB) has been envisaged as a
its catchment basin is 1,390,000 square
long-term engagement at country level, among
kilometres which is half that of the Nile.
sub-regional clusters and across the basin. The
The Upper Zambezi is only sparsely populated challenge in the ZRB is to promote cooperative
flowing towards the Victoria Falls which are development and management of international
considered the boundary between the upper and waters in a way that drives sustainable
middle Zambezi. Below the falls, the river continues economic growth and improves the livelihoods
to flow, dropping some 250 metres over the next of the populations that critically depend on the
200 kilometres, before entering Lake Kariba. sustainable use and management of shared waters.
IRMSA - Aon Risk Research Report | June 2015 11Kariba Dam
The dam as seen
from Zimbabwe
a. Some 420 kilometres downstream from Victoria Falls, the
Kariba Dam is the largest man-made reservoir in the world.
At a height of 128m and with a crest length of 617m, the dam
has the capacity of holding 181 billion cubic metres of water.
Designed as a double curvature concrete arc dam, the Kariba
Dam was constructed across the Zambezi River between 1956
and 1959. Commissioned in 1960 and opened by Queen
Elizabeth the Queen Mother, the dam has been central to
regional energy security and economic development ever since.
From 1958 to 1961, “Operation Noah” captured and
removed around 6,000 large animals and numerous
small ones threatened by the lake’s rising waters.
b. The Kariba dam creates Lake Kariba – which is some 280km long at
full level, 32km across at its widest, 5,400 square kilometres surface
area and has a catchment area of 663,000 square kilometres.
12 IRMSA - Aon Risk Research Report | June 2015c. The Kariba Dam is central to energy security done to boost tourism and funds generated
in the form of hydropower electricity towards further development of the area.
generated for Zimbabwe and Zambia and Most of the residents are employed in
as the Zambezi continues to flow towards the fishing industry, mainly Kapenta.
Mozambique it flows into the Cahora Bassa
Lake and then continues to provide electricity e. The dam was designed by Andre Coyne,
for Mozambique and South Africa. The a French civil engineer who designed 70
Kariba Reservoir supplies water to two dams in 14 countries. See later in this report
underground hydro power stations with a about the failure of the Malpasset dam in
total capacity of 1,839 MW. The North Bank 1959, also designed by Andre Coyne.
station is operated by the Zambia Electricity f. Since 2010, Tractebel Engineering has been
Supply Company (ZESCO) in Zambia advising the (ZRA) on matters pertaining
and has an installed capacity of 1,080 to safety, maintenance and satisfactory
MW. The South Bank station is operated operation of the dam. The agreement
by the Zimbabwe Power Corporation includes engineering studies and works
(ZPC) in Zimbabwe and currently has an supervision of the spillway rehabilitation,
installed capacity of 750 MW, with projects construction of an emergency gate and
underway to increase this to 1,050 MW. sustainability of the plunge pool.
d. Kariba Town is a serene home to 46,000 g. There is a new publication available -
residents and also a variety of wildlife. “Whispers from the Depths” a book by Liz
According to a report from AllAfrica. and Mike Wickens and published by Tracey
com, sadly the town is not benefiting from McDonald Publishers - this may be worthy of
proceeds associated with activities on a read to gain more insight on the building
Lake Kariba. Residents feel more could be of the Kariba Dam in the mid-1950s.
IRMSA - Aon Risk Research Report | June 2015 13Cahora Bassa Dam
a. The Cahora Bassa Dam is in Mozambique at Songo in Mozambique and the other
and is one of three major dams on the at Apollo in South Africa. There are two
Zambezi river system, the others being the parallel power lines between these two
Kariba and the Itezhi-Tezhi, the latter on the stations, covering 1,400 kilometres, of which
Kafue River, a tributary of the Zambezi. 900 km is in Mozambican territory. Long
stretches of the power transmission lines
b. Dam construction began in 1969 and the were sabotaged during 16 years of the
dam was opened in 1974. The dam is Mozambican Civil War which ended in 1992.
171 metres high, by 303 metres wide and
creates the Cahora Bassa Lake reservoir. d. When understanding the impact on
the local population during and after
c. The Cahora Bassa system is the largest construction, readers may like to refer
hydroelectric scheme in Southern Africa to a book “Dams Displacement and the
with the powerhouse containing five 415 Delusion of Development – Cahora Bassa
MW turbines. Most of the power generated and its’ legacies in Mozambique 1965-
is exported to South Africa, which is done 2007” by Allen & Barbara Isaacman. It is
by the Cahora Bassa HVDC system, a set always important to understand the history
of high voltage direct current lines. The behind such massive construction projects
system includes two converter stations, one and appreciate all sides of any issue.
14 IRMSA - Aon Risk Research Report | June 2015The Zambezi River
Authority (ZRA)
The ZRA was established as a body corporate on the
first day of October, 1987 by parallel legislation in the
Parliaments of Zambia and Zimbabwe following the
reconstitution of Central African Power Corporation.
The ZRA operates under the Zambezi River Authority
Act, and is mandated to harness and manage the
Zambezi River waters for socio-economic development
and to maintain the Kariba Dam complex including
any future dams or infrastructure on the river forming
a common border between Zambia and Zimbabwe.
The ZRA will manage the Kariba Dam Rehabilitation
Project together with, Tractebel and other
Consultants, Engineers and Construction entities
as necessary and appointed for the project.
Go to www.zaraho.org.zm for more detail on the ZRA.
IRMSA - Aon Risk Research Report | June 2015 155. The Problem and the Kariba Dam
Rehabilitation Project
After more than 50 years of providing power for the Southern African
Region, the Kariba Dam now requires a series of rehabilitation works
for its continued safe operation. The program is to be implemented over
the next ten years, taking into account the need to continue operating
the dam safely with minimal interruptions to power generation.
The rehabilitation project includes:
The plunge pool – media comment is that
this problem was noticed a decade ago
but no action was taken. Spillway torrents
have excavated a massive cavern in the
Zambezi river bed, now 10 times bigger
and deeper than the original design
dimensions, that threatens the stability of the
wall foundations. It is necessary to reduce
the turbulence from water, discharged at
8,000 tonnes a second at times, into the
plunge pool below the dam by enlarging
the cavern, and allowing the turbulence
resulting from the spillway discharge to
be dissipated in a less damaging way.
The reshaping of the plunge pool calls
for the construction of a temporary
cofferdam or barrage. This will enable the blasting and excavation
of 300,000 cubic metres of rock from the downstream face and
north and south bank sides of the pool in the dry season.
It was suggested that the work is only likely to start in May 2015,
after the rainy season, beginning with the construction of the
cofferdam, however according to the Zambia Daily mail in March
2015, the works are set to commence in September 2015.
16 IRMSA - Aon Risk Research Report | June 2015Kariba’s floodgates are designed to release Alkali Silicate Reaction (ASR) – an internet
the magnitude of floodwater that occurs once response related to a Business Day article
in 10,000 years, so if one gate is out of action in February 2015 “To the rescue of Kariba
for repair and the spillway capacity is reduced Dam” by ‘JVG’, was interesting:
it is most unlikely to result in any problem,
even with one gate out of action the spillway http://www.bdlive.co.za/business/
capacity would probably still be enough to innovation/2015/02/17/to-the-
pass the flood event that occurs once in 1,000 rescue-of-kariba-dam
years. Floods on the Zambezi take some “The real danger-obscured by this article – is
time to build up so there would be advance one of Alkali Silicate Reaction (ASR), in simple
warning from rainfall monitoring in the upper terms this is a chemical reaction that leads
catchment, allowing for time to respond. to the breakdown of the physical integrity of
This part of the project will take eight to 10 concrete, hence the term “swelling”, although
years to complete, partly because only one gate descriptive, is incorrect and softens the reality.
can be worked on at a time but also because Once ASR sets in, the reinforcement’s integrity
the plunge pool excavation work cannot be is endangered – as oxygen and moisture
done if the lake level is high and the dam is penetrate the weakened concrete and the
spilling, completion is projected for 2023. reinforcement corrodes to a point where it
actually fails. Ultimately – and in the Kariba
Have a look at this video to see one of the case – most probably – it reached a stage
Kariba Dam gates in action https://www. where the steel reinforcement is severely
youtube.com/watch?v=qDnkfO3g63s weakened, point is – this dam WILL FAIL”.
And this further video gives some information on Whilst obviously this is a personal opinion, it
the 2009 Sayano-Shushenskaya hydroelectric seems clear that the issue of ASR has been
power station accident – this did not involve known for some time and has contributed
the total collapse of the dam but damage to the current safety concerns.
to the power station was considerable.
Nine out of 10 turbines were damaged The permanent secretary of the Zambian
or destroyed and 75 people killed. Ministry of Finance, Felix Nkulukusa, indicated
in January 2015 that the danger arose from an
https://www.youtube.com/ alkali-aggregate reaction in the dam wall, which
watch?v=bfW5MqT7CSA could induce swelling within the concrete mass. In
addition, the spillway sluice gates were no longer
opening and closing automatically to maintain
the required water levels, owing to distortion
and swelling of rusting steel components.
IRMSA - Aon Risk Research Report | June 2015 17The project, according to the ZRA will: The WB are leading the project from the
funding perspective and their web site
• Assist in securing the long-term provides considerable information. It
safety and reliability of the Kariba seems that the rehabilitation will extend
Dam Hydro-Electric scheme. over 10 years as the project closing date
• Improve the socio-economic is noted as the 28 February 2025.
security associated with continued The project development objective from the WB
operation of the dam. perspective is to assist in improving the safety
• Benefit the downstream riparian states of and reliability of the Kariba Dam. There are three
Mozambique and Malawi by avoiding components to the project totalling U$294.2m:
a disaster that would affect the Cahora • Institutional and Project
Bassa Dam and Lake Malawi. Management US$70.3m
• Through the rehabilitation works, contribute • Plunge Pool Reshaping US$99.3m
to the South African Power Pool (SAPP)
both in terms of generation capacity and • Spillway refurbishment US$124.6m
stability of the system and continued safe
operation of the dam.
• Benefit the South African
Development Community
(SADC) through economic
gains supported through
the continued operation
of the Kariba Dam Hydro-
Electric Scheme.
• Extend the life of the dam
for a further 100 years
Map of the project area and
the Zambezi River Basin
18 IRMSA - Aon Risk Research Report | June 20156. Risks and Opportunities
Risk issues and related comments are collated under five
headings, following the categorisation utilised in the IRMSA Risk
Report – South Africa Risks 2015, and the World Economic Forum
(WEF) Global Perceptions Survey. An additional heading “other
risks, challenges and opportunities” was included to cater for
issues that did not appear to fit into the five WEF categories as
these seem to reflect mainly negative impacts or causes.
6.1 Economic Risks
Risks in the economic category include fiscal and liquidity
crises, failure of a major financial mechanism or institution,
oil-price shocks, chronic unemployment and failure of physical
infrastructure on which economic activity depends.
Countries, Industries and natural resources
Botswana is a completely landlocked country in the centre of
Southern Africa. Covering an area of 582,000 square kilometres,
Botswana shares borders with South Africa, Namibia, Zambia
and Zimbabwe. The Kalahari Desert occupies more than 70% of
the country and its capital City, Gaborone is located in the south
east of the country. With a population of just over two million,
the mining sector is the major contributor to the export base
and the government is endeavouring to reduce the vulnerability
arising from the heavy dependence on diamond mining. The
livestock industry, specifically beef and beef processing is another
significant export. Tourism is mainly focused on the Okavango
Delta, the Kalahari Game Reserve and the Chobe National Park.
IRMSA - Aon Risk Research Report | June 2015 19Zimbabwe occupies 390,757 Zambia is an entirely land- Mozambique lies on the east
square kilometres of land in locked country covering coast of Southern Africa,
south central Africa, between an area of 752,612 square measuring a total of 799,380
the Limpopo and Zambezi kilometres, with a population square kilometres in area. The
rivers and is richly endowed of approximately 13 million. country borders the Untiled
with mineral resources such To the north it is bordered by Republic of Tanzania, Zambia,
as gold, chrome, asbestos, the Democratic Republic of Malawi, Zimbabwe, South
coal, iron ore, nickel, copper, Congo and the United Republic Africa and Swaziland. With
diamonds and platinum. The of Tanzania, to the west by a total population in excess
land-locked country is bounded Angola, to the south west of 20 million, agriculture is
by Mozambique to the east, by Namibia, to the east by the backbone of the economy
Zambia to the north and south Malawi and Mozambique and providing employment for
west, South Africa to the to the south by Zimbabwe and over 75% of the work force.
south and to the south west by Botswana. Lusaka is the capital
Botswana. With a population city and is believed to be the According to the International
of over 14 million, Zimbabwe’s fastest growing city in Central Monetary Fund (IMF),
economy is dependent Africa. Mining and quarrying strong economic growth in
on agricultural products, account for a large proportion Mozambique is supported
mining, industry and cattle of Zambia’s merchandise by major investments in coal
farming. Tourism contributes exports. Zambia is presently the mining and natural gas sectors
approximately 5% of GDP world’s fourth largest producer but stricter controls over
however very little development of copper and has around state-run firms is necessary.
in this area has occurred since 6% of the world’s known Mozambique is in the process
1996. At present Zimbabwe is reserves. Other contributors of offering over a dozen
facing severe socio-economic to the economy are industry, exploration blocks in its
difficulties and the country is fishing and agriculture. The northern region, where US oil
at high risk of debt distress, tourism sector has consistently major Anadarko Petroleum
with an unsustainable external demonstrated growth due and Italy’s Eni are already
debt estimated at US$ 8.4 to a rich natural heritage. developing multibillion dollar
billion at the end of 2014. The natural gas projects.
government plans to hold a
high-level international debt
resolution forum in 2015 with
the assistance of the African
Development Bank (AfDB).
20 IRMSA - Aon Risk Research Report | June 2015Malawi is a landlocked country located in The economy of South Africa is the second
southern central Africa along the western part of largest in Africa, behind Nigeria. It accounts for
the Great Rift Alley of Africa. Covering a total 24% of its gross domestic product in terms of
area of 118,484 square kilometres, Malawi is purchasing power parity, and is ranked as an
bordered by the United Republic of Tanzania to upper-middle income economy by the WB, one
the north and north east, Mozambique to the east, of only four countries in Africa in this category.
south and south west and Zambia to the west.
Lake Malawi is the third largest lake on Africa and The country’s economy is reasonably diversified
is the area’s principal tourist attraction. Malawi with key economic sectors including mining,
has an estimated population of 14 million and agriculture and fisheries, vehicle manufacturing
agriculture is the largest sector of the economy. and assembly, food processing, clothing
and textiles, telecommunication, energy,
financial and business services, real estate
tourism, transportation and wholesale and
retail trade. The majority of these industries
require an adequate and reliable electricity
supply to maintain performance.
The high levels of unemployment and
inequality, together with crime related events,
are considered by the government and
most South Africans to be the most salient
economic problems facing the country.
IRMSA - Aon Risk Research Report | June 2015 21Dam construction and management
a. The cost of a new dam to replace the Kariba c. Whilst reviewing the impact of the failure of
dam is estimated at US$5bn by a number the Kariba Dam it has been assumed that the
of Zambian sources, what is not clearly dam would be re-built, however with climate
understood is whether this includes removal change and rainfall patterns impacting future
of the damaged infrastructure following the dam levels and new technologies coming to
dam collapse. The timeframe around this the fore, will this necessarily be the solution?
“new build” is unknown but is likely to be a d. Reports from many sources indicate that “if
minimum of five years with potentially another nothing is done, the dam will collapse in three
three years to remove the existing structure. years” however there are many differing
The location of any new dam is likely to thoughts around this, primarily around the
be far downstream of Kariba at some sites possible underlying causes that may trigger
previously identified however environmental such a catastrophic event. Business Day live
issues may be a cause for concern. notes that in the event of a “catastrophic
Kariba Dam failure”, economic damage to
b. The cost of replacing the Cahora Bassa
the region will exceed R88 billion and will
Dam, following a devastating failure of include the washing away of the Cahora
the Kariba Dam and the flooding that Bassa Dam and the loss of 40% of Southern
would reach Cahora Bassa in an estimated Africa’s Electricity capacity”. It is not
eight hours after this catastrophic event, is clear how this number was arrived at and
unknown but is likely to be similar in terms based on the potential lead time for any
of the cost and timeframe noted for Kariba. replacement of electricity generating capacity
The dams might be repaired or replaced and the funding requirements, together
concurrently rather than one after the other with the impact on the region’s people and
and funding will be a key challenge. economies it seems a rather low number.
22 IRMSA - Aon Risk Research Report | June 2015e. Design life of dams – according to f. De-commissioning of Dams – referring
engineering comments, large dams have an again to engineering comments the question
indefinite life. Their structure could last as arises – how do you de-commission a dam?
long as the pyramids (5,000 years). For as Looking at Kariba specifically, and 100 to
long as they hold water someone will have 500 years hence, there are a number of
to look after them and maintain the spillways possible scenarios but it is not possible to
and powerhouse. This implies that designers,
drain the dam – there is no provision for
builders and owners must look further
de-watering; the power station could be
ahead than they have done in the past and
shut down, and the spillway gates opened
ensure that their dams can be maintained
indefinitely or, if necessary dismantled. but this would mean the gates would soon
need repair and the plunge pool would
Large dams usually have an “economic life” need evacuation downstream; the dam
of 50 or more years, reaching the end of could be blown up, but the water flow would
that “life” when they have paid themselves then destroy Cahora Bassa and flood the
off – if they silt up later it is seen as no Zambezi valley. The cost of de-commissioning
great loss in present value terms. The Kariba
is unknown but should include bringing the
rehabilitation project is said to increase the
area back to as near pristine condition as
life of the dam by a further 100 years.
possible. Again this would need funding.
Silting may also be a concern for the
Kariba dam which is said to be less than g. Looking to the future, it would seem that the
efficient. When silting occurs the bottom Kariba dam, and indeed most dams within
outlets are first to be blocked followed the region, will need adequate maintenance
by the power intakes. Finally silt fills the for a significant period of time, was this
reservoir to spillway level and as it is heavy, considered in the original project planning
the load on the dam is much increased. or was the objective shorter term focused?
IRMSA - Aon Risk Research Report | June 2015 23Electricity & infrastructure
a. Deloitte’s report on Sub-Saharan Africa Six disruptors were highlighted:-
(SSA) Power Trends makes interesting
reading. The report indicates that low i. African economic growth,
levels of infrastructure and power supply transformation and rising demand
are a deterrent for many wanting to ii. A shifting energy mix giving rise
invest across various sectors in Africa. The to new capital and players
development of large capital projects relies
iii. Changing role and type of customers
on robust planning, reliable funding, and
resilient operating structures together with iv. Renewable technologies
skills development. The team note that
v. Changing market structures
unreliable, insufficient and costly power
and dynamics
generation and distribution across the
African continent has arguably been the vi. Smarter grids and systems,
Achilles heel to higher and more inclusive smarter utilities
growth and socio-economic development b. In December 2014, the SAPP suggested
of the region. Infrastructure stock levels that the region could experience savings
have impeded rather than facilitated of over US$48 billion if all the current
growth and development although this is electricity generation projects in the
changing rapidly. The report suggests that pipeline are implemented in a coordinated
“A disruption displaces an existing fashion. This would mean synchronizing the
market, industry or technology and implementation of various planned energy
produces something new and more projects with expected capacity of 27,881
efficient and worthwhile. It is at MW and the current completion date in
once destructive and creative” 2018. There appears to be little chance of
this occurring as national plans seem to
take precedence over regional plans.
24 IRMSA - Aon Risk Research Report | June 2015c. Zambia relies on hydro power for more than d. Mozambique – The entity that operates the
90% of its electricity, according to Bloomberg Cahora Bassa dam on the Zambezi River –
Business. Water levels have declined at Lake Hydroelectric de Cahora Bassa (HCB), advises
Kariba and Kafue Gorge plants which are that a further hydro power station with the
the source of three-quarters of that supply. capacity to produce 1,045 MW is to be built
Load shedding will increase during 2015 once funding is agreed. Construction will take
to approximately 600 MW, almost 30% of six years and will add to the current 2,075
available capacity, directly due to reducing MW capacity. The country currently supplies
water levels. Two new plants are expected to power to neighbouring South Africa, Namibia,
provide up to 420 MW by the end of this year. Zimbabwe and Swaziland and is likely to
extend this to include the DRC and Tanzania.
Lusaka’s energy demand has grown at 6%
a year over the past 10 years, with demand The existing HCB dam was built by Portugal,
outstripping installed capacity. Engineering news South Africa and Germany during colonial
reports that Aurecon will provide engineering, times. A few years ago, the dam was
design and construction supervision services transferred to the Mozambican state for
for ZESCO for a US$200m WB funded Lusaka US$700m, following lengthy negotiations
transmission and distribution rehabilitation between Maputo and Lisbon.
project, due for completion in 2019.
Recently HCB has announced it will spend
Zambia’s Copperbelt Energy Corporation about US$14m on protecting transmission lines
(CEC) is the largest supplier of power to mines against the effects of flooding. This will involve
in the southern African nation. Reliability strengthening the pylons on or near river banks
of supply for mining customers seems to be to be able to withstand the forces of waters
a major issue with a number of blackouts during peak moments of a flood. On the 12th
occurring each year. CEC is in talks with January 2015 a massive flood on the Licungo
Old Mutual over a possible US$205m hydro River, in the central province of Zambezia
power station on which work has already swept away 10 pylons on the transmission lines
started with completion anticipated in 2018. carrying Cahora Bassa power to the north of
the country, leaving parts of the region without
Impacting both Zambia and Zimbabwe, the power for four weeks. HCB power is carried
Batoka Hydro Electric scheme is expected to South Africa along two high voltage direct
to go ahead through the ZRA. US$6m has current lines each running for about 1,400
been released by the WB for the feasibility kilometres and with a total of 2,000 pylons.
study. The project is expected to start in
2016 with completion in 2021. Go to http:// Other projects under review include:
victoriafalls24.com/blog/2015/01/26/latest-
update-batoka-dam-project/ for more information • The Lupata Hydro Electric facility – 416 MW
and to see some of the risks highlighted. • The Boroma Hydroelectric dam – 210 MW
A recent news report from the Zambia Daily • The Mphanda Nkuwa dam – 1,500 MW
Mail talks about the knock-on impacts of load
shedding “Apparently the only people who are • Lurio Hydroelectric plant – 180 MW
enjoying load shedding are call-girls who are
taking advantage of the situation to provide • Alto Malema Hydroelectric dam – 60 MW
outdoor flings to their clients in dark corners of
the streets” and “Some electricity consumers
are considering temporarily stopping paying for
their DStv bouquets until load shedding is over”.
IRMSA - Aon Risk Research Report | June 2015 25e. Zimbabwe – the power utility ZESA has a a coal power station. If the water supply
number of challenges to contend with, the for this proposed station is not available,
most recent related to the declining water the plant will be unable to produce.
levels in the Kariba Dam, which have led to
a 400 MW reduction in generation power Engineering news in April 2015 reported
and then a fault at the Hwange Power Station that Zimbabwe plans to build new power
which occurred in June 2015, apparently stations to generate 3,500 MW at a cost
related to the aging plant and the need for of US$5 billion according to the national
refurbishment. With only 1,000 MW available power company ZPC. Where funding for
and a demand of 2,000 MW, Zimbabwe this construction will come from is not clear
has been experiencing crippling power as lenders like the IMF and WB have said
shortages for a long time, allAfrica.com they will only resume lending to the country
comments that “the country will endure its’ once it clears its debts with the global
darkest winter season in history this year”. lenders. However The Southern Times
newspaper commenting on the project to
Unfortunately the power crisis is likely increase capacity at the South Kariba hydro
to lead to increasing unemployment in power station by 300 MW notes that this
the country together with increasing upgrade has been facilitated by a US$319m
poverty levels, with job seekers potentially loan from China. It further states that this
seeking relief across adjacent borders. deal is a clear example of Zimbabwe’s
“Look East” policy which was adopted
RioZim, which mines gold, diamonds and after falling out with Western powers.
coal in Zimbabwe wants to work with state-
owned power utilities in South Africa and A decline in commodity prices with a
Namibia to build a 1,400 MW electricity strengthening of the US dollar makes
plant near its Sengwa coal fields and export debt unsustainable in many economies.
power to Eskom and Nampower. Coal for Zimbabwe’s massive external debt,
the plant will come from the company’s amounting to 40% of GDP, remains a sign
coalfields in northern Zimbabwe, while it of vulnerability and other countries in the
will draw water from Lake Kariba, 85km region, such as Mozambique and Tanzania,
to the north. So, whilst we look at options are racking up debt to fuel growth. Debt
to deal with the power supply problem, servicing will squeeze public expenditure
utilising coal as the fuel source, we need for many years within such economies, what
to appreciate the amount of water to run can we learn from the crisis in Greece?
26 IRMSA - Aon Risk Research Report | June 2015f. South Africa – Eskom Holdings (Eskom) is a State owned company
that generates, transports and distributes approximately 95% of South
Africa’s electricity, making up 60% of the total electricity consumed
on the African continent. Eskom is the world’s eleventh largest
power utility in terms of generating capacity, ranks ninth in terms of
sales, and boasts the world’s largest dry-cooling power stations.
Eskom sells power directly to some 6,000 industrial, 18,000 commercial,
70,000 agricultural and 3 million residential customers. It owns
and operates a number of coal-fired, gas-fired, hydro and pumped
storage power stations, as well as one nuclear power station.
Eskom’s 26,000 kilometres of transmission lines span the
entire country and extend into most SADC countries.
The situation within South Africa in terms of available electricity
supply has been of concern for a number of years with the Utility’s
reserve margin at far less than optimum levels. Two major new coal-
fired power stations are in the process of being built but delays have
resulted in significant cost increases and the need to utilise Open Cycle
Gas Turbines on a regular basis or to load-shed customers. Increasing
costs of supply need to be met by consumers, however the National
Energy Regulator (NERSA) has not allowed the Eskom recommended
tariff increases in the past few years. This has led to a downgrading of
Eskom by credit rating agencies and an increase in the cost of debt.
A lack of maintenance on existing stations within the Eskom
fleet has led to a less than efficient fleet with unplanned
breakdowns, further reducing the available capacity.
A long term agreement for the importing of power from HCB accounts for
1,500 MW of the Utility’s total available capacity and the failure of the
Kariba Dam would have a serious effect on Eskom’s ability to continue
to provide sufficient power to their customers. If we look at two of the
units of one of the new stations being more or less equivalent to the loss
of the imported power from Cahora Bassa, it is clear that such an event
would be severe for all South Africans, let alone the rest of the region.
g. Deloitte Corporate Finance experts comment that inadequate infrastructure
remains a major obstacle towards Africa achieving its full economic
growth. Meeting the demand for key infrastructure has been identified as a
priority creating an exciting opportunities for global investors who need to
look past the traditional Western view of Africa as a homogeneous block
and undertake the detailed research required to understand the nuances
and unique opportunities of each region and each individual country.
Is there an opportunity perhaps for the risk fraternity to consider a
new type of risk assessment – Regional Risk Management – looking
specifically at the systemic risks impacting the entire region?
IRMSA - Aon Risk Research Report | June 2015 27h. Creamer Media’s Engineering News A WB “Chair Summary” related to a meeting
reports on the WEF Global Strategic held 9 December 2014 and considering
Infrastructure Initiative (ASII) which the Kariba Dam Rehabilitation Project,
hopes to draw billions of dollars to although not an approved record, states:
boost infrastructure projects in Africa.
“Directors acknowledged that a
“Africa has a US$100 billion a year potential catastrophic failure of the dam
infrastructure gap. It needs to spend would result in devastating regional
U$1.5 trillion in the next 15 years to flooding, significant loss of human
provide water, electricity, sanitation, life, and unprecedented economic
roads, rail and economic growth damage downstream in the Zambezi
necessary for 80 million young people River. They also acknowledged the
in Africa to get jobs every year”. complexity and risks of the proposed
undertaking and underscored the
i. According to a report in Business Day Live, importance of building strong capacity
among the significant external activities and sound institutional arrangements
likely to cause concern on the integrity of for success. The importance of close
the dam are the drill and blast operations monitoring and taking appropriate
at the Kariba south bank during the project. precautions to mitigate environmental
Such activity causes vibrations and shock and social risks was strongly urged”.
waves which must be capped at certain
thresholds. It has been recommended that More details are available for those
all drill and blast operations taking place at interested in further research on the
and near the dam are monitored, logged, WB web site – www.worldbank.org.
analysed and controlled according to
recommendations for the Kariba Dam. It seems evident that failure to obtain funding
to rehabilitate the Kariba Dam, and of course
j. With all of the construction related to actually ensure the project is completed,
projects in progress or anticipated in the would have such an impact on other projects
region, competition for skills, specifically in and around the Zambezi that this specific
engineering and consulting expertise, is project surely had priority in terms of funding.
likely to be a significant challenge.
Revenue generated for Zambia, Zimbabwe
k. The total cost of works is estimated at and Mozambique specifically around
US$294m. The Governments of Zambia electricity generation and the reduction in
and Zimbabwe have mobilised funding revenue if hydroelectric power from the
from the AfDB, the European Union (EU), Zambezi is reduced or eliminated for a
the Government of Sweden and the WB significant period would severely impact
to support the ZRA in the project. the economies of these countries – could
it also lead to failure to repay existing
View Marcus Wishart from the WB as he loans and impact further investment?
talks about the project: https://www.youtube.
com/watch?v=hXclsm2wll4&feature=player_
embedded
28 IRMSA - Aon Risk Research Report | June 20156.2 Environmental Risks
Risks in the environmental category include both natural disasters, such as earthquakes
and geomagnetic storms, and man-made risks such as collapsing ecosystems, freshwater
shortages, nuclear accidents and failure to mitigate or adapt to climate change.
a. If the tidal wave of water from the collapse d. Climate change in SADC – The
of the Kariba Dam reaches Mozambique Intergovernmental Panel on Climate
and the Cahora Bassa dam, it is likely to Change (IPCC) provides good information
overwhelm this dam releasing another 51 on this topic. Climate modellers indicate
billion tons of water, making the spillage four further increases of mean temperatures
times bigger than the largest on record. between 2 and 4.5 degrees centigrade
in the next 50 to 100 years, these
b. Flood Disaster Management. Until the variances are expected to be greater in
Environmental and Social Impact Assessment the summer than in the winter season.
(ESIA) and Environmental and Social
According to the AfDB Project Appraisal
Management Plan (ESMP) documents are Report, the IPCC has categorised the
available it would be unfair to comment on Zambezi as the river basin exhibiting the
whether sufficient attention has been given to “worst” potential effects of climate change
the downstream flood potential and impact. among 11 major African basins, due to the
There is no doubt that a catastrophic failure resonating effect of increase in temperature
of the Kariba Dam would have a long term and decrease in rainfall. The Zambezi runoff
impact on the people of the area, the flora is highly sensitive to variations in climate,
and fauna and agriculture which is a key to as small changes in rainfall produce large
the economies of most of the riparian states. changes in runoff. Over the next century,
climate change is expected to increase this
c. New Civil Engineer International Magazine variability, and the vulnerability of the basin
reports that a Kariba collapse would be and its hydropower dams to these changes.
a repeat on a massive scale of the 1959
The future picture for Southern Africa’s
collapse of the Malpasset dam in the South
climate is increasingly clear, based on
of France, which was also the work of observed trends over the past century
Andre Coyne who designed Kariba. The and increasing confidence in the range
Malpasset dam was completed in 1954, but of climate change scenarios developed.
on 2 December 1959 it collapsed releasing Overall the Zambezi will experience
a 40m high wall of water that killed 423 drier and more prolonged rough
people. The villages of Malpasset and periods, and more extreme floods.
Bozon were completely destroyed. Heavy
In considering the aspect of climate
rain was suggested to be one of the causes
change related to this report, it is clear
and the water levels behind the dam were
that the loss of water in both the Kariba
unusually high, delays in opening the flood- and Cahora Bassa dams, should Kariba
gates were also noted as an issue but the fail, will take some time to build up again
main cause was held to be a tectonic fault to current volumes. If we consider the
in the underlying gneiss. Coyne never time to repair or replace these two dams,
recovered from the shock of the disaster and the impact both up and downstream
died soon afterwards at the age of 69. may be significant for five - 10 years.
IRMSA - Aon Risk Research Report | June 2015 29You can also read
