MachimarAdhikarSangharshSangathan

Mundra, Kutch, Gujarat

Press Statement |October 24, 2013

World Bank President Dr. Kim shies away from taking action despite investigations find social & environmental violations at Tata Mundra

The recourse mechanism of International Finance Corporation (IFC), the Compliance Advisor Ombudsman (CAO) in its report released yesterday found serious social and environmental policy non-compliance by IFC and Coastal Gujarat Power Limited (CGPL), the promoters of Tata Mundra Ultra Mega Power Project in Kutch, Gujarat. Despite the significant findings, the World Bank Group President, Dr. Jim Kim shied from taking any actions to check or minimise the negative impacts on the people and environment.

Stopping short of calling for IFC’s withdrawal from financing Tata Mundra project, the CAO said in its report, “…IFC’s Environment & Social 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.”

MachimarAdhikarSangharshSangathan (MASS) welcomes the report and its findings.  MASS is the local organisation of fishworkers affected by power projects including Tata Mundra, Adani, OPG power projects, Mundra port and Special Economic Zone.

“The findings reiterate and reconfirmthe concerns raised by the communities since long,” Bharat Patel, General Secretary of MASS said. “The findings, based on scientific studies, are indeed a shot in the arm for the people struggling to protect the livelihoods of thousands of fisherfolk in Kutch coast.”

MASS had lodged the complaint with CAO in June 2011.

Key Findings

·         The Complainants, who are from a religious minority and occupy a socially marginal position given their migrant traditions, were not adequately considered as the (Environmental and Social) E&S risks and impacts of the project were considered and addressed.

·         There is no social baseline data in relation to the fisher people who reside seasonally in the fishing villages. In the absence of a baseline data IFC was not in a position to ensure the proper application of IFC’s policies related to land acquisition, despite indications that households living on the bundershave been displaced by the project (both physically and economically).

·         IFC failed to ensure that its client’s (Tata) E&S assessments adequately considered the risks and impacts of the project on these fisher people.

·         IFC paid inadequate attention to the requirementof biodiversity conservation.

·         Serious lapses in IFC’s review and supervision of the impacts of the project on the airshed and marine environment.

·         IFC has not ensured that its client correctly applied the World Bank’s Thermal Power: Guidelines (1998) in that the project airshed has notbeen defined as a degraded airshed—a classification that brings with it a requirement that there will be no net increase in the total emissions of particulates or sulphur dioxide within the airshed.

·         IFC’s process of E&S review was not appropriate to the nature and scale of the project or commensurate to risk as required by the Sustainability Policy (of IFC).

·         IFC has not assured itself that the plant’s seawater cooling system will comply with applicable IFC Environmental, Health and Safety (EHS) Guidelines.

·         IFC’s E&S review paid inadequate attention to ensuring that the project’s risks and impacts were “analyzed in the context of [its] area of influence,” as required by Performance Standard 1 (of IFC), including “areas potentially impacted by cumulative impacts…from project-related developments that are realistically defined at the time the E&S assessment is undertaken.”

·         IFC should have advised its client that third-party E&S risk emerging from the project’s proximity and relationship with Mundra Port and Special Economic Zone needed to be better assessed, with mitigation measures developed.

 IFC’s response& conflict of interest

 IFC put its credibility at risk, by rebutting all the findings of CAO and going out of the way to defend its client, CGPL and its parent company, Tata. IFC’s response to the CAO findings smacks of arrogance, refusal to learn lessons and disregard to people and their rights.

 The fact that the company has commissioned Bombay Natural History Society (BNHS) to undertake biodiversity mapping of the zone to be impacted by the thermal plume, that BNHS corroborated the findings of Marine Environment Impact Assessment (which was questioned by CAO) and engaged BNHS to carry out turtle monitoring program is used in IFC’s management response to discredit the CAO findings and to support the company. However, BNHS is a partner of Tata Power, the parent company of CGPL, according to their annual report 2009-2010. The current president of BNHSMr.HomiKhusrokhan is a former Managing Director of Tata companies. Despite having such an umbilical cord between the two, how can BNHS findings be independent and impartial is anybody’s guess. IFC hoodwinks the public on the conflict of interest.

 President Kim shies away from walking the talk

 Despite alarming findings by CAO, President Kim did not acknowledge even one of the findings and supported blindly the IFC management response, making himself and IFC complicit to the violations at Tata Mundra.

 By clearing IFC response, the message President Kim is sending is that he supports his staff’s denial of science, of expert findings and endorses management’s avoidance of accountability. People in and out of the institution will see this move a form of hypocrisy. He endorses management’s response that the coal plant does not cause public health concerns (when it’s been high in the President’s past and present advocacy). It then contradicts the President’s energy directions paper and pronouncements on moving the institution from coal financing. His tall talk on climate change is proving to be a charade.

 Undermining the mandate of CAO

 After considering the CAO findings and IFC management response for 5 weeks, by not recognising even one finding of CAO, Dr. Kim sends a strong and damaging signal that Bank’s internal watchdogs like CAO and Inspection Panel are more for namesake and that despite their findings its business as usual for the Bank.

 “We wonder why an institution like CAO exists if their findings are not given any value and no action is taken upon it,” said SoumyaDutta, coordinator of the Independent Fact Finding Team whose report Real Cost of Powerdocumented the violations of the company in June 2012. “If President Kim is serious about the accountability that he talks about, and about learning from the Bank’s mistakes to prevent them from occurring again, he should not hesitate to take bold decisions based on the findings.”

 Communities demand the World Bank President stop pretending that he can take people for a ride and take bold actions based on the CAO findings. “Now that World Bank’s own investigations found such serious lapses, it is time for the Bank to sit up and take appropriate and immediate actions. We will not agree on anything short of IFC withdrawing financing from the project,” Bharat Patel said.

CAO Audit Report:http://www.cao-ombudsman.org/cases/document-links/documents/TermsofReference_CGPLAudit_October242012.pdf

IFC Response to CAO Audit report:  http://www.cao-ombudsman.org/cases/document-links/documents/IFCresponsetoCAOAudit-CoastalGujaratPowerLimited.pdf

http://www.business-standard.com/article/companies/ngos-demand-world-bank-withdrawal-from-tata-s-mundra-umpp-113110400736_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/