DTI review of Export Credits Guarantee Department’s role threatens £142m funding for Balfour project.

Cash given to British construction firms working on overseas projects is to face greater scrutiny following a review of the role of the Export Credits Guarantee Department.

The review was ordered by Stephen Byers, secretary of state for trade and industry, and could affect funding for the controversial £1.25bn Ilisu Dam project in south-east Turkey. Byers said the ECGD’s activities needed to become more transparent. He added that, in future, funding would be available only for small projects. The ECGD, which is responsible to Byers, provides underwriting services for UK exporters.

The news comes as the government denied newspaper reports that funding for the Ilisu Dam, which contractor Balfour Beatty is involved in, would be withdrawn. However, insiders said the ECGD’s intention to begin supporting smaller projects cast doubt on the scheme.

An ECGD spokesman said the department would not make a final decision on funding until reports on the dam’s environmental impact had been completed. These are not expected for some weeks.

The report includes a series of new guidelines that will come into force immediately.

Byers said: “ECGD should be clearly consistent with government’s wider international policies to provide sustainable development, human rights, good governance and trade throughout the world.”

Byers requested the reports after saying he was minded to underwrite £142m of funding for the Ilisu scheme in December.

Balfour is set to receive the cash to carry out construction work on the dam.

A spokesperson for Balfour said that, as far as it was aware, the Ilisu Dam scheme would still receive ECGD backing.

A year-long review on the ECGD, published on 25 July, said that future ECGD support should promote sustainable development and human rights.

It follows an all-party select committee on international development report released earlier this month that said the scheme “was from the outset conceived and planned in contravention of international standards”.