CAO Cases

Arne Hoel, The World Bank

Latin America & the Caribbean

Costa Rica / Reventazon HPP-02/Siquirres

Complainant
A local family
Date Filed
December 20, 2016
Concerns
Lack of compensation for land acquisition, loss of livelihood, biodiversity, environment
Case Status
Open - Compliance
 

Synopsis

Project Overview
IFC’s active project consists in the development, construction and operation of a 305.5 MW hydropower generation plant in the Reventazón river basin located in Siquirres, province of Limón, Costa Rica. The project is expected to generate around 1,400 GWh annually once operational.  IFC’s commitment is a US$100 million A loan.

 

Complaint

The complaint was filed by a family that owns a farm located in the vicinity of the project. The complaint raises concerns related to lack of compensation for land expropriation, impacts on agricultural activities and loss of livelihood, impacts on biodiversity, natural habitat and the environment, and project due diligence. 

 

CAO Action
CAO found the complaint eligible for further assessment in January 2017. During CAO's assessment a consensus could not be reached on engaging in dispute resolution, and in June 2017 CAO referred the case to its compliance function for appraisal.   

 

Given the similarity of the issues raised, CAO merged the case with an earlier case (Reventazon-01) for the purpose of its compliance appraisal.  CAO released its compliance appraisal report in October 2017, and concluded that an investigation was merited in relation to the issues raised by the complainants around land acquisition.

 

In October 2019, CAO released its compliance investigation report and IFC’s official response.

 

CAO found that the acquisition of land from "non-vulnerable" landowners (69% of the households affected by the project) was a source of significant potential impact and required the client to apply Performance Standard 5 on Land Acquisition and Involuntary Resettlement (PS5). CAO’s investigation identified compliance issues at project appraisal in relation to this group of landowners, particularly regarding the requirement to provide compensation at full replacement cost. PS5 compliance issues persisted during project supervision, as IFC was aware of the company’s reliance on expropriation for these landowners, but did not question this approach in the context of PS5’s preference for negotiated settlements. IFC was also aware of concerns regarding the company’s approach to land valuation, leading to potential under-compensation, however, it did not ensure that the company’s valuation methodology was consistent with PS5 requirements. 

 

A Resettlement Completion Audit (RCA) provided a final opportunity for IFC to identify and correct any non-compliance with PS5 requirements. The RCAidentified concerns regarding land acquisition from non-vulnerable landowners. As a result of the RCA, at the time of writing this report, IFC was in the process of reviewing information provided by the company to determine whether fifteen affected families were misclassified as non-vulnerable. 

 

On the balance of available evidence, CAO found that IFC lacks assurance that all displaced landowners were compensated for loss of assets at full replacement cost and provided with other assistance to help them improve or at least restore their livelihoods as required by PS5. An underlying cause of the non-compliance identified in this report was IFC’s focus on the resettlement impacts of the project on vulnerable households, at the expense of ensuring compliance in relation to the (in this case larger) group of households deemed non-vulnerable. The objectives of PS5 and the requirement for compensation at full replacement cost apply equally to vulnerable and non-vulnerable households.

 

In light of the findings of this report, CAO will keep this investigation open for monitoring, and will issue a monitoring report no later than one year after publication of this investigation.


Status

CAO released its compliance investigation report and IFC’s official response on October 24, 2019, and is monitoring the case. 

 

Status as of October 24, 2019 

Project information

Institution
IFC
Project Name & Number
Reventazon HPP 31383
Department
Infrastructure
Company
Fideicomiso Uno P.H. Reventazon /I.C.E./ Scotiaban
Sector
Large Hydro - Renewable Energy Generation
Region
Latin America & the Caribbean
Country
Costa Rica
Environmental Category
A
Commitment
US$100 million A loan

Case Tracker

Ombudsman

  • Eligible: Completed
  • Assessment Period: Completed

Compliance

  • Under Appraisal: Completed
  • Under Audit: Completed
  • Monitoring: In Process

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