India / Tata Ultra Mega-01/Mundra and Anjar
Coastal Gujarat Power Limited (CGPL or the company) is building, and will operate a 4,000MW ‘ultra mega’ imported coal and supercritical technology based power plant at the port city of Mundra in the state of Gujarat in India. The project will source imported coal from mines of Indonesia and other countries. IFC’s is investing in the project through an A Loan of US$450 million.
In June 2011, a complaint representing various potentially affected fishing communities was filed with the CAO. The complaint raises issues related to the project’s social and environmental impact on fishing communities, specifically: deterioration of water quality and fish populations, blocked access to fishing and drying sites, forced displacement of fishermen, community health impacts due to air emissions, and destruction of natural habitats, particularly mangroves. The complainants also believe the impacts to their fishing communities were not adequately identified and mitigated, and the cumulative impact of the project was not adequately assessed.
The complaint was deemed eligible for assessment in June 2011. A CAO Ombudsman team visited the site in August and October 2011 to engage with the relevant parties to discuss options for resolution of the issues raised in the complaint. After a series of meetings and discussions with CAO, the complainants decided that they preferred that CAO transfer the complaint to its compliance function. CAO's ombudsman team concluded their involvement in the case and released an assessment report in English and Gujarati.
The case was formally transferred to CAO Compliance in February 2012. CAO's Operational Guidelines provide for a compliance appraisal in order to decide whether an audit of IFC's role in the project is warranted.
On July 27, 2012, the CAO concluded the compliance appraisal, which found that a number of issues raised by the Complainants merit further enquiry. In particular:
· whether IFC exercised due diligence in reviewing CGPL’s environmental and social (E&S) assessments;
· whether IFC gave adequate consideration to the cumulative impacts of Adani Power and the construction of the Mundra West Port in its E&S review;
· whether IFC’s assessment of community support for the project was adequate;
· whether Performance Standard 5 has been correctly applied with regard to the Complainants’ seasonal fishing settlements and fish drying areas;
· whether IFC provided CGPL with adequate guidance on the drafting of an Action Plan that met the requirements for specificity set out in Performance Standard 1;
· whether IFC exercised due diligence in its review of CGPL’s reporting on regulatory and lender E&S requirements;
· whether IFC has been sufficiently proactive in engaging with the client to remedy E&S issues that have been identified in project supervision;
· whether IFC policies and procedures provide adequate guidance to staff on how to manage E&S risks associated with projects in areas that are in the process of undergoing rapid industrial development with environmental and social consequences to be defined.
The CAO compliance audit/investigation was made public on October 22, 2013. While acknowledging much diligent work done by IFC and CGPL in relation to E&S aspects of what is a large and complex project, the CAO compliance audit/investigation validates key aspects of the MASS complaint
Key findings from the audit/investigation include:
· The Complainants, who are from a religious minority and occupy a socially marginal position given their migrant traditions, were not adequately considered as the E&S risks and impacts of the project were considered and addressed.
· IFC has contributed to this situation to the extent that its review of CGPL’s E&S assessments was not commensurate with project risk as required by its Sustainability Policy.
· A lack of effective consultation with fishing communities early in the project cycle process resulted in missed opportunities to assess, avoid and reduce adverse potential adverse impacts of the project in accordance with the objectives of PS1.IFC failed to ensure that its client correctly applied the requirements of the World Bank Group Thermal Power Guidelines (1998), to an airshed that should be classified as degraded.
· Projections that the thermal plume from CGPL’s outfall channel will extend a distance of kilometers into the shallow waters of the gulf and surrounding estuaries suggest inadequate mixing/cooling, with significant risks of ecological impact.
· IFC did not take the steps necessary to ensure that the application of PS5 in relation to the Complainants was properly assessed.
· Cumulative nonlethal (but potentially harmful) effects of submarine noise, light, heat, and other aquatic disturbance from the project on the local marine environment were not adequately considered in marine impact assessment process.
· IFC is not in a position to demonstrate either that its client’s monitoring is commensurate to risk (as required by PS1) or that its supervision allows it to meet the stated purposes of supervision as set out in the ESRPs: namely, the development and retention of information needed to assess the status of E&S compliance.
· Confidence among the IFC team in the client’s E&S capacity and commitment, combined with a view that the project is performing well from an E&S perspective, have meant that IFC has not treated the Complainants’ concerns as compliance issues
As per CAO's Operational Guidelines, this case will remain open as CAO monitors IFC's response to the findings.
On November 25, 2013, IFC provided CAO with a statement including action plan items in relation to this audit/investigation. CAO has posted this statement and action plan in the View Documents section below.
CAO's monitoring of the implementation of the action plan is ongoing.
Updated: April 07, 2014
- Project Name & Number
- Tata Ultra Mega 25797
- Coastal Gujarat Power Limited
- South Asia
- Environmental Category
- $450 mil A loan
- Eligible: Completed
- Assessment Period: Transferred
- Under Appraisal: Completed
- Under Audit: Completed
- Monitoring: In Process