Global NGOs unhappy over WB support to Tata's Mundra UMPP

Seek withdrawal of IFC funding from the Tata Power's 4,000 Mw power project in Gujarat

After Indian NGO, as many as 68 civil society groups from 28 countries have condemned the World Bank Group’s continued support for Tata Power's 4000 Mw ultra mega power plant (UMPP) in Mundra, Kutch, despite the Ombudsman for International Finance Corporation (IFC) finding serious lapses by IFC in supervision of the coal-base power project, impacting environment and livelihood of local fishing community there.

The global groups in an open letter to World Bank President Dr Jim Yong Kim, Friday last, have further demand that IFC be held accountable for the lapses by taking appropriate actions to address the findings of the Ombudsman, starting with development of a remedial action plan and the withdrawal of IFC financing from the Tata Power's power project in Mundra.

The action by civil rights groups from across the world comes on the heels of a letter from over 100 civil society groups in India demanding that the World Bank Group’s IFC withdraw funding from the Tata Power's project in Gujarat.

In its audit report for the power project, released last month, the Compliance Advisor Ombudsman (CAO) for the IFC and the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group, had also held that IFC's review of project's environment and social assessments was not commensurate with project risk as required under its Sustainability Policy.

IFC had refuted the charges levied by CAO and justified its actions and funding to the power project operational under banner of Coastal Gujarat Power Limited (CGPL), a fully owned company of Tata Power.

Commenting on open letter by global civil society groups spokesperson for Tata Group said, "CAO report reflects the observations on the internal processes of IFC & thus it will only be appropriate for IFC to respond. We are yet to read through the report & would discuss with IFC if there were any issues related to CGPL. As per initial information available with CGPL, MASS (the Association for Fish workers' Rights) has certain generic issues concerning the coastline of Gujarat. Mundra UMPP is just about 1% of Kutch coastline & we are more than responsive in our association with the community around our project & we remain committed to working with the community at all times."

"Mundra plant is fully compliant on all environmental and social norms and the same has been endorsed by MOEF and other statutory bodies and is committed to being a 'neighbour of choice'," the spokesperson further added.

In the open letter sent to Kim the global civil society groups have asked, "As concerned World Bank stakeholders and contributing taxpayers to our respective government’s official aid through the Bank, we are disturbed by your clearance of IFC response to the CAO report on the Tata Mundra coal power project. In solidarity with the Indian fishing communities, we demand an explanation why you rejected the CAO findings on IFC’s policy violations in funding the Tata Mundra coal power plant."

"Unless the findings from the World Bank Group’s internal watchdogs, like the CAO and the Inspection Panel, are taken seriously and acted upon, their role is in name only. This decision undermines the mandate of CAO while allowing staff and management to avoid culpability. Civil society around the world demand you hold the IFC accountable by taking hard but appropriate actionsto address the CAO findings, starting with the development of a remedial action plan and the withdrawal of IFC financing from the Tata Mundra coal project," the groups demanded.

In its audit of Tata UMPP, the CAO had found "weaknesses in IFC’s environment and social (E&S) review of CGPL did not support the formation of a robust view as to whether the project could be expected to meet the requirements of the Performance Standards over a reasonable period of time, the threshold question in terms of IFC’s decision to invest."

"Weaknesses in IFC’s E&S review process also meant that required opportunities to consider alternative project designs to avoid or minimize E&S impact were missed," the CAO stated in its findings.

IFC has invested $450 million of its own capital in this project, which it has classified as a category A project, signifying that it believes there are potentially significant adverse social and environmental impacts that may be diverse or irreversible. IFC was also considering investing up to $50 million in equity as part of its exposure to the project and syndicating up to about $300 million in loans

http://www.business-standard.com/article/companies/global-ngos-unhappy-over-wb-support-to-tata-s-mundra-umpp-113111100401_1.html

CAO Dispute Resolution Process on Tata Mundra Coal Project a Failure

Assessment Report does not understand the complex issues and is unfairly protective of the company

Disappointing. This is how we, members of the Machimar Adhikar Sangharsh Sangathan (MASS – Association for the Struggle for Fishworkers’ Rights) see the assessment report of the Compliance Advisor Ombudsman (CAO) on our case against Tata Mundra coal power project. One, CAO fails to understand the deep-seated issues we raised in our complaint. Two, its Ombudsman goes out of the way to justify the company for its omissions and violations.

An assessment begun in August 2011, the report projects, us, the complainants as adamant and unreasonable; that we are not prepared to enter into a collaborative process of dispute resolution. For us, this finding indicates that CAO has fallen into the sweet talk and PR of the company, whose track record in many other projects in the country is notoriously dismal.

The report cites CAO’s view that a collaborative process may have been helpful in this case to address many of the concerns. Had we engaged in an open dialogue, CAO reports, the company could have enhanced benefits such as provision of health and schooling services for fishing communities. This is a very myopic view and a simplistic solution to the complex problems the company has brought to us. The report is also profoundly silent about the violations we have raised in the complaint.

We had pointed out in our complaint the absence of cumulative impact assessment; IFC and its client’s failure to recognize fishing communities as affected population; and the absence of environmental clearance for in-take channel, conveyer belt, port and railway line (all being shared with the adjacent Adani project), and for the open cooling system. CAO purposefully ignored to mention these issues in its report. We do not think CAO fully understands the issues we brought to their attention.

In the report, CAO has not failed to mention that some fishworkers are satisfied with what the company has compensated them, without remembering that the complaint was from the aggrieved communities and not the other. We believe CAO should have covered in its assessment the other adversely impacted people, like the farmers, shepherds/ cattle herders, whose lands have been usurped for the project and the other externality costs.

CAO’s utter failure to accurately assess the broad concerns in our complaint and to ensure a conducive mediation process is disappointing. We hope that the compliance process will be more prudent, objective and forthright in looking at the issues that we have raised, particularly in the context of the poor assessment report, the long-term harms this project has created, and the multiple policy violations.

Hard decisions must be taken to save threatened communities and the marine and land resources from the long-term havocs of the coal power plant. There must be a full audit, not just a desk-based review from distant experts, and ToR for the audit must be disclosed.

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Additional information

In June 2011 Machimar Adhikar Sangharsh Sangathan (MASS – Association for the Struggle for Fishworkers’ Rights) sent a complaint to the Compliance Advisor Ombudsman, the recourse mechanism at the International Finance Corporation, of the World Bank Group. The complaint now moves to the compliance arm of the CAO, after the Ombudsman has submitted the assessment report.

The complaint emerged to hold IFC accountable for co-financing the 4,000 MW coal-based Tata Ultra Mega Power Plant. Lodged by fishing and farming villagers, the complaint claims that due to flawed design and execution, including breaches of mandatory client obligations, the mammoth coal-fired power plant is contributing to the destruction livelihood of thousands of families and will cause irreparable damage to their fragile marine resources and agriculture.

With a total project cost of US$ 4.14 billion, the IFC is investing a $450 million loan and $50 million in equity. Other financial institutions funding the project are the Export-Import Bank of Korea, Asian Development Bank, India Infrastructure Finance Co. Ltd., Housing and Urban Development Corporation Ltd., Oriental Bank of Commerce, Vijaya Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Travancore, the State Bank of Indore and other local banks.

As the plant is located in the special economic zone (SEZ) that cuts across fishing grounds, habitat of diverse marine lives and wide expanse of farm land, complainants state that the project’s social impact assessment is significantly flawed. Fishing communities were excluded from the list of those directly impacted; the major damage and potential loss of their livelihood was deliberately overlooked.

On the economic side, the recent Indonesian government’s revision of its coal export pricing structure effectively doubled prices. This revision has immediate and severe impacts on the Tata Mundra plant. Tata Power Managing Director has said that it could become a “non-performing asset” and began actively lobbying the Indian government for a tariff revision as well as a diplomatic push to get the Indonesian government to revise its pricing structure. Whatever happens on the tariff front, if all costs are taken into account, including the huge social and environmental costs, we believe that the project can never be economically viable.

http://www.indianexpress.com/news/world-bank-arm-to-relook-at-its-investment-in-tata-powers-project-in-kutch/912351/0

http://counterview.org/2012/02/15/fishermens-problem-along-mundra-coast-stems-from-wider-issues-of-industrialization-world-bank/