In 2007, Coastal Gujarat Power Limited, a subsidiary of Tata Power, began development of a 4,150MW coal-fired power plant in Mundra, a port town in the Kutch district of Gujarat, India. The plant, known as the Mundra Ultra-Mega Power Plant, is located 3km from the Gulf of Kutch.   At the time of IFC’s investment, the project’s total cost was estimated at US$4.14 billion, of which IFC financed US$450 million in the form of an A loan. IFC’s direct involvement with the client lasted until September 2018 when CGPL prepaid its loan.

In June 2011, CAO received a complaint regarding IFC’s investment in CGPL from Machimar Adhikar Sangharsh Sangathan (MASS), the Association for the Struggle for Fishworkers’ Rights, representing fisher people living near the project development site. The complainants self-identified as belonging to a minority community of Wagher Muslims for whom fishing is an important traditional livelihood and who live in two coastal fishing tent communities: Tragadi and Kotadi bunders, situated between and to the east of the power plant’s cooling water intake and outfall channels.

The complaint raised concerns about 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 argued that IFC and CGPL did not adequately identify and mitigate the impacts on fishing communities, and that the project’s cumulative impacts were not adequately assessed.

In June 2011, CAO found the complaint eligible and initiated an assessment. A CAO dispute resolution team visited the site in August and October 2011 to engage with the parties and explore options for resolving the issues raised. Following these discussions, the complainants requested that the case be transferred to CAO’s Compliance function. The Assessment Report is available in English and Gujarati.

In February 2012, the case was transferred to CAO Compliance for appraisal of IFC’s E&S performance.

In July 2012, CAO completed the appraisal and determined that several issues raised by the complainants merited further inquiry. The Appraisal Report is available in English and Gujarati.

In October 2013, CAO published its Compliance Audit report (Investigation Report, available in English and Gujarati) based on an investigation of the issues raised by the fishing communities in the complaint. While acknowledging the work done by IFC and CGPL in relation to E&S aspects of what is a large and complex project, the CAO compliance Audit validated key aspects of the complaint. Among the Audit’s key findings was that IFC’s E&S due diligence was not commensurate with project risks, including, for example, that vulnerable communities were not adequately considered at the time the project’s E&S risks and impacts were assessed. CAO also found shortcomings in IFC’s supervision of the project with respect to ensuring project compliance with applicable World Bank Group standards on air quality, marine environment, access to land, and project monitoring.

In November 2013, IFC published a statement and action plan (Available in English) in response to the Audit findings. CAO commenced monitoring of IFC’s actions to meet its action plan commitments. CAO issued its first monitoring report in January 2015, conducted a monitoring visit in February 2016, and published a second monitoring report in January 2017.

In September 2017, CAO concluded a compliance appraisal of a second complaint related to the project (CGPL-02), which raised similar concerns. CAO decided to merge the two cases for ongoing monitoring. 

In September 2018, CGPL repaid its loan to IFC. CAO’s third monitoring report covers IFC’s actions during 2017-2018 in response to the 2013 Audit. CAO monitoring confirms that IFC implemented most of the commitments it made in 2013 to work with CGPL on project-related E&S studies. However, these efforts did not address the Audit’s findings on complainants’ concerns. Observations included: socioeconomic surveys without documentation of the project’s impact on fishing communities, particularly the seasonally resident fishing community; insufficient documentation of effective engagement with affected groups; a limited livelihood plan for pagadiya fishers (traditional foot fishers from the coastal regions of Gujarat); continued exceedances of particulate matter (PM10) standards; marine studies without a defined mixing zone or full biodiversity assessment; no cumulative impact assessment; and monitoring that did not capture all non-compliances. 

In March 2025, CAO conducted a field visit. Communities continued to report declining environmental quality, reduced fish stocks, agricultural losses, coastal erosion, fly ash dust, salinity in water supplies, and health issues. While most complainant concerns likely stem from cumulative environmental impacts of industrial development in the region, CAO noted several impacts likely attributable to the IFC-financed project, including coastal erosion and ecosystem degradation near the plant’s cooling water outfall, fishkill from intake systems, coal dust and fly ash deposition, and skin irritation due to exposure to water discharged from the outfall. Mitigation measures identified included a recirculating cooling water system and a coastal protection program.

Although IFC received voluntary commitments from its client prior to repayment, the absence of a commercial relationship and the time elapsed since IFC’s last efforts in 2018 made it unlikely that IFC would complete the 2013 Action Plan or address the CAO Audit findings. Therefore, decided to conclude the monitoring process. 

CAO notes that the process has been unsatisfactory for complainants, whose concerns about health, livelihoods, and the environment remain unresolved. Looking forward, CAO considers that addressing the documented E&S challenges in the Mundra region would benefit from a collaborative approach. A regional program involving government agencies, multilateral development banks including the World Bank and Asian Development Bank (ADB), local industries, and affected communities could help address the cumulative impacts of industrialization and growth through ecosystem restoration, infrastructure development for safe water supply, and sustainable livelihood opportunities for affected communities.