UK engineering group Amec has pulled out of the Yusefeli dam project in northeast Turkey, due to doubts about the economic viability of the project.

The Yusefeli dam was expected to flood 18 towns and villages, displacing about 15,000 people. Anti dam lobbyists have alleged that the dam would also destroy the habitats of endangered species and wash away important archeological sites.

Amec had applied to the UK’s export-credit-guarantee-department (ECGD) for US$97M in government guarantees to cover its construction costs in the US$1B dam project.

The French construction company Spie Batignolles, is leading the project consortium. Amec is a 46% shareholder in Spie and is expected to exercise an option to fully acquire the company in January 2003.

Amec’s decision to withdraw from the project comes in the wake of UK-based Balfour Beatty’s decision not to pursue it’s interest in the Ilisu dam project, also in Turkey.