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Bezawit Abrham Componentsof Feasibility Study Mba-1

The document provides two examples of failed development projects. The first was a 44 million tantalum processing plant in Phuket, Thailand that was stopped in 1986 after protests from locals. The plant would have polluted the environment and impacted tourism. The second was the Chixoy Hydroelectric Dam in Guatemala that was completed in 1985 but vastly over budget due to engineering errors, design changes, and failure to address impacts to local communities. Both examples highlight the importance of thorough economic, environmental, and social assessments during project planning to prevent failures and ensure local support.

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43 views4 pages

Bezawit Abrham Componentsof Feasibility Study Mba-1

The document provides two examples of failed development projects. The first was a 44 million tantalum processing plant in Phuket, Thailand that was stopped in 1986 after protests from locals. The plant would have polluted the environment and impacted tourism. The second was the Chixoy Hydroelectric Dam in Guatemala that was completed in 1985 but vastly over budget due to engineering errors, design changes, and failure to address impacts to local communities. Both examples highlight the importance of thorough economic, environmental, and social assessments during project planning to prevent failures and ensure local support.

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Beza Abr
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© © All Rights Reserved
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ADDIS ABABA UNIVERSITY COLLEGE OF BUSINESS AND ECONOMICS

BY: BEZAWIT ABRHAM MELESSE GSE/6377/15

DEPARTMENT OF BUSINESS ADMINSTRATION

DR. TEFEREI GHEBRAY


ADDIS ABABA, ETHIOPIA

MAY, 2023
EXAMPLE ONE

a) Project/Program- A 44 Million tantalum-processing plant project (Hancock, 1992, p.


149)
b) Objective- the objective of the plant is to produce tantalum, a metallic chemical element
used to make electronic components.
c) Status- Stopped in June 23, 1986 (Started in 1982.)
d) Reason for failure- people protesting plans to open a chemical plant set fire to the
factory claiming that the plant would pollute the environment and hurt tourism
furthermore the plant was capital intensive and would create only a few new jobs.
e) Link- The root of the issue is most likely associated with economical analysis and
environmental impact assessment.
i. the viability of the project is not evaluated as the book stated the cost of
the project is greater than that of the benefit extracted from the project.
ii. the project is a serious risk to the tourist trade which provided the majority
of their incomes.
iii. the adverse impacts on the environment is not reviewed
iv. the bank had not taken the trouble to investigate local opinions of the
scheme before going ahead with it

EXAMPLE TWO

a) Project/Program- Chixoy Hydroelectric Dam (Hancock, 1992, p. 150)


b) Objective- electricity generation for the country.
c) Status- completed in 1985(started in 1976)
d) Reason for failure- excessive budget for major redesign work to address adjusted
seismic criteria for the dam and tunneling works, following the heavy 1976 earthquake.
Additional costs were made to correct engineering errors, and to finance repairs to tunnel
damage in the first year of operation, resulting in substantial over-budgeting. From the
US$372.7 million calculated costs in 1978, the Chixoy project ended up costing US$944
million. However, it will have to be paid back by the Guatemalan people out of taxes. To
this burden must be added the 70 per cent price-hike for domestic electricity that has been
imposed since the dam's hydro power began to provide three-quarters of the nation's
electricity needs.
e) Link- the reasons for the failure of the project is associated with technical analysis,
environmental impact assessment, and risk and uncertainty assessment.
i. engineering errors
ii. Designs for this facility were approved, the project financed, and construction
begun in 1975 without notifying the local population.
iii. Construction began without conducting a comprehensive census of affected
peoples,
iv. without legal acquisition of all the land supporting the construction works, the
dam, and the hydroelectric generation facility, nor legal acquisition of land that
would be flooded by the reservoir.
v. Construction proceeded without a plan to address compensation, resettlement and
alternative livelihoods for some 3,445 mostly Mayan residents who would be
displaced, and, without assessing the losses and developing safeguards measures
for the 6,000 households in surrounding communities who faced flooding of land
and other property, loss of sacred sites, loss of access to land, and disruptions of
transportation routes, socioeconomic ties between communities, and access to
traditional markets
Reference

Hancock, G. (1989). The Lords of Poverty: The Power, Prestige, and Corruption of the
International Aid Business. New York: The Atlantic Monthly Press.

Retrieved from: https://en.wikipedia.org/wiki/Chixoy_Hydroelectric_Dam on May 5 2023

Sophie, T. (1986). Phuket ablaze: Thailand's Wackersdorf journal of EIR News Service Volume
13.

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