In 2007, IFC invested in India Infrastructure Fund (IIF, “the Fund”), a private equity fund focused on various infrastructure sectors in India. One of IIF's portfolio investments is GMR Kamalanga Energy Limited (GKEL), a special purpose vehicle established by GMR Energy Limited. GKEL's primary objective is to develop and manage a 1400 MW coal-based power plant located near Kamalanga village in Dhenkanal district, Odisha.

In April 2011, Odisha Chas Parivesh Surekhsa Parishad (Odisha Agriculture and Environmental Protection Council), a grassroots organization, together with the Delhi Forum, a Delhi-based advocacy and research organization, filed a complaint with the CAO on behalf of people affected by the project. The complaint highlighted issues regarding the disclosure of project details, transparency concerning environmental and social risks associated with Kamalanga Energy's operations in Odisha, and broader concerns regarding IFC’s role in financing such projects.

In May 2011, CAO found the complaint eligible and initiated the CAO Assessment phase. During the assessment, the complainants and the company agreed to participate in a dispute resolution process. However, the parties were unable to resolve the issues raised in the complaint during this process. As per CAO's Operational Guidelines, the case was referred to CAO's Compliance function.

In January 2016, CAO released its investigation report, along with IFC’s official response. The report identified several deficiencies in IFC's oversight of IIF, including failures in IFC's environmental and social (E&S) due diligence before investment, deficiencies in managing E&S risks, inadequate supervision, and insufficient transparency. The report also noted deficiencies in IFC's approach of relying on IIF to develop its own E&S management systems, which did not meet expected standards. Despite receiving complaints and approving funding several years earlier for the GKEL project, IFC acknowledged that significant concerns raised by complainants regarding project impacts had not been adequately addressed in line with IFC's Performance Standards (PS).

CAO Monitoring Reports

In March 2019, CAO published its First Monitoring Report. CAO noted that IFC had actively monitored IFF’s implementation of the IFC-IIF E&S Action Plan. Positively, IFC had negotiated additional supervision access rights and conducted site supervision visits to three portfolio companies to verify PS implementation. Notwithstanding IFC’s active supervision of the Fund and noting IFC’s view that the Fund’s E&S performance was rated as unsatisfactory since 2012, CAO expressed concerns that IFC’s investments potentially had adverse E&S project impacts, which had yet to be resolved.

Regarding the Kamalanga project, CAO noted that IFC actively supervised the implementation of the IIF’s and GKEL’s E&S Social Action Plan. This plan facilitated the creation of additional assessments and strategies aimed at addressing project impacts. However, CAO emphasized the need for ongoing IFC supervision to ensure compliance at the project level, particularly concerning issues identified in CAO's investigation. These include the effectiveness of livelihood restoration measures for affected households due to land acquisition, consultation processes related to livelihood restoration plans, local language disclosure of project E&S information, methodology for determining compliance with PS7 assessment and mitigation of community health impacts, and monitoring of the project's adherence to IFC air quality standards.

In May 2024, CAO published its Second Monitoring Report. The report outlines IFC’s supervision of the E&S Action Plans committed to by IIF and the Kamalanga project. CAO’s report notes that IFC has failed to provide evidence of adequate implementation of the client E&S Action Plan, and available evidence indicates that PS gaps persisted at the Kamalanga project at the time of IIF’s exit from the coal plant in 2022.

As IIF is currently disposing its investments and ending its operations, CAO decided to close this case, as there is no reasonable expectation of further action by IFC to address the impacts raised by the complainants.

The Omnibus Monitoring Report for this case is available in English.