Chile: Alto Maipo-01/Cajon del Maipo
Water shortage and contamination, noise pollution
Debt US $150 million
IFC has an active project with Alto Maipo SpA. According to IFC, the project comprises the construction of two run-of-the-river hydroelectric facilities connected in series with a combined capacity of 531 MW for the purposes of providing baseload electricity to the Chilean Central Interconnected Grid or SIC. It will be developed in the Upper Volcan River, Upper Yeso River and Colorado River, all in the Maipo River Basin and 90% of the Project’s infrastructure will be underground, which will include powerhouses, siphons, access tunnels and water conveyance systems, including a total of 67 kilometers (km) of tunnels.
CAO received a complaint filed by a local organization, La Coordinadora Cuidadana No Alto Maipo, and Ecosistemas, a Chilean environmental NGO focused on ecological and socio-cultural concerns at the national and international level, on behalf of affected communities. The complaint alleges that the project will lead to diversions of the Maipo river resulting in impacts on water access and quality, farming, tourism and the environment. Further, the complaint raises concerns with regards to the Project’s impact assessment and alleges that the Project construction activities have resulted in impacts for two communities, notably noise pollution.
CAO found the complaint eligible for further assessment in March 2017 and an assessment trip was conducted in April 2017. During the assessment, there was a lack of consensus amongst the parties to engage in a CAO facilitated dispute resolution process. Hence, in accordance with CAO’s Operational Guidelines, the case has been referred to CAO’s Compliance function.
CAO concluded its compliance appraisal in May 2018, and decided that an investigation was warranted in relation to the issues raised in the Alto Maipo-01 complaint. In reaching this conclusion, CAO has considered a number of issues. Firstly, CAO notes that this is a category A project, which by definition has potential significant environmental and social risks and impacts. Secondly, CAO notes that the complaint raises a range of issues regarding project impacts that are serious in nature, and require further expert review. Thirdly, CAO notes that, as part of the regulatory supervision process in Chile, the national environmental authority has raised a number of concerns about project impacts that are aligned with those raised by the complainants. CAO noted, however, that the signatories of the complaint do not include workers employed by the client or contractors of the project. Therefore, CAO has decided to exclude issues raised regarding labor and working conditions.
The case was merged with the Alto Maipo-02 complaint for the purpose of the compliance investigation. CAO published the Terms of Reference for this investigation in August 2018.
In June 2021, CAO finalized its compliance investigation in relation to the Alto Maipo 01 and 02 complaints and the investigation report was sent to IFC for formal response.
CAO's investigation found that IFC’s pre-investment review was generally consistent with the requirements of the IFC Sustainability Policy to conduct a review “appropriate to the nature and scale of the activity and commensurate with the level of E&S risks and/or impacts”. However, in relation to specific issues raised by the complainants, IFC did not ensure the client’s compliance with the Performance Standards requirements. These include lack of consultation with affected communities during the development of the cumulative impact assessment, lack of a comprehensive project’s alternative analysis, and lack of evidence to support the conclusion that the project enjoyed broad community support.
During supervision of the project, CAO found that the adoption of the adaptive management approach allowed IFC to identify and address several issues in accordance with good international industry practice (GIIP). These include waste rock disposal; prevention of impacts on the arriero community; preventive actions on potential impacts on protected areas and assessment of risks to avoid damages to sites of cultural heritage value during the time of IFC’s involvement in the project. However, the adaptive management was not applied systematically to all project’s aspects. Further, CAO finds that such approach should not substitute projects’ E&S impact assessment. CAO found that IFC was not in compliance with its Sustainability Policy in relation to the following issues: Infiltration of groundwater during tunneling, sediment transport, biodiversity protection, air quality, noise, tourism and recreational activities and IFC’s disclosure of information.
In relation to the second complaint, CAO found that during pre-investment IFC, and the lenders took steps to ensure themselves that the client had HR policies and a grievance mechanism in place. CAO finds that IFC’s supervision did not ensure that the client took appropriate measures to prevent and address harassment, intimidation, and/or exploitation, especially with regard to women, as required by Performance Standard 2 (para. 15). CAO further finds that IFC’s supervision did not ensure that the client had in place a grievance mechanism for workers of the company and its contractors that was sufficient to address concerns promptly, using an understandable and transparent process, including in relation to the case of sexual harassment brought by the CAO complainant.
On September 16, 2021 the IFC Board of Directors cleared CAO's investigation and IFC’s official response, including a Management Action Plan.
CAO will monitor the effective implementation of the actions set out in IFC’s Management Action Plan, based on CAO Policy. All case reports are available under the "Case Documents" section below.
Status as of September 22, 2021.