British engineering group Amec has pulled out of a controversial Turkish dam project, saying it is unlikely to yield sufficient returns.

"AMEC has concluded that its resources would be better deployed in other areas including the furtherance of its strategy to develop an international base of service-related activity," the company said in a statement.

"Accordingly AMEC has decided not to participate further in the project."

The Yusefeli Dam was expected to flood 18 towns and villages, displacing about 15,000 people.

Dam busted

Amec's decision to walk away from the Yusefeli Dam in north east Turkey comes just months after Balfour Beatty quit the controversial Ilisu dam, also in Turkey.

An Amec spokesman told BBC News Online neither the negative publicity surrounding Balfour Beatty nor a perceived conflict of interest over funding had influenced its decision.

Like Balfour Beatty, Amec had applied to the UK's Export Credit Guarantee Department - a UK government agency which underwrites some corporate export activities - for backing to build the dam.

The company had asked the ECGD for �68m in government guarantees to cover its construction costs in the $1bn dam project.

In late January, the ECGD confirmed that Liz Airey, an Amec director, also chaired the agency's advisory group.

Indirect involvement

But despite ending direct participation in the project, Amec will continue to be involved unless French construction company Spie Batignolles, which is leading the project consortium, also withdraws.

Amec is a 46% shareholder in Spie and is expected exercise an option to fully acquire the company in January 2003.

If Amec succeeds in taking control of Spie, it would conduct a similar assessment of its involvement in the dam project, the spokesman said.

Spie, along with fellow consortium members Dragados and FCC Construction of Spain and Besix of Belgium have applied to their respective national export credit agencies for backing.