Panama: Pando Montelirio-01/Chiriqui
16 local civil society organizations, Chiriquí province
Consultation, cumulative impact assessment; water
$25 mil A Loan, $15 mil C Loan, $5 mil IFC swap
The Pando Monte Lirio project, approved by IFC on February 4, 2010, consists of two run-of-river hydroelectric power plants to be operated in cascade on the Chiriquí Viejo River in Western Panama. The plants, totaling 85 MW in installed capacity (Pando, 33 MW and Monte Lirio, 52 MW), are being developed by Electron Investment, S.A. a joint venture between Inveravante Inversiones Universales S.L. of Spain, and the Panamanian entity Grupo Eleta. The total project cost is estimated to be US$291.7 million.
In January 2010, sixteen community and environmental organizations based in the Chiriqui province filed a complaint with CAO citing a number of social and environmental concerns, including:
• lack of participative consultation process with communities;
• lack of a cumulative impact assessment;
• possibility of flooding to communities downstream;
• endangering of fish and other species;
• over-exploitation of water resources and the river;
• limited community access to water;
• high levels of sedimentation that affect water quality and downstream water treatment facilities (such as Baru); and
• negative impacts on the natural landscape and on mangroves located near the mouth of the river in the Gulf of Chiriqui.
To better understand views and perspectives of the parties, a CAO Ombudsman team traveled to Panama in June 2010 to conduct a field assessment with complainants, company, community members, and local and national authorities. In July, the team returned to the field to discuss the draft assessment report and next steps with the stakeholders, who agreed to continue working with the CAO Ombudsman to address the issues raised through a facilitated dialogue process.
The complainants also submitted the same complaint to the Inter-American Development Bank’s (IADB) Independent Consultation and Investigation Mechanism (MICI, by its Spanish acronym). CAO has coordinated closely with IADB staff and MICI throughout the Ombudsman intervention. In October 2010, CAO and MICI formalized their joint facilitation of the dialogue process.
The CAO-MICI team held several working meetings with the complainants, company, IFC, IADB, and other stakeholders, including additional local community members, municipal authorities, other lenders, and national government regulators. CAO-MICI also convened two information sharing sessions in October 2010 for the complainants, company, and local and national governmental authorities (National Environmental Authority, National Authority for Public Services, and the Bugaba Mayor’s Office). For the next five months, in preparation for the Dialogue Table, CAO-MICI met and communicated with the parties intensively to help them reach an agreement on the complaint issues. By March 2011, the parties were still unable to reach an agreement.
Since the company and complainants were unable to resolve the issues raised in the complaint through a collaborative process, CAO Ombudsman concluded its involvement in the case and released a conclusion report summarizing the Ombudsman process in April 2011. In accordance with CAO’s Operational Guidelines, and to provide assurance that there are no outstanding concerns regarding IFC's compliance with applicable social and environmental requirements related to the project, the case was transferred to CAO Compliance for appraisal. The appraisal process assesses whether an audit of IFC is merited.
CAO's appraisal report, completed February 2012, found that IFC identified and assessed all the major concerns raised by the complainants that related to the direct impacts of Pando Monte Lirio project. The appraisal also found that IFC identified and, based on the information available, assessed the Project’s contribution to the potentially cumulative impacts of future development. However, the CAO also found that at the time of the investment decision, details about the potential cumulative impact of the development of the entire Chiriquí Viejo River basin were not defined.
The CAO found that a compliance audit at this stage of IFC’s engagement in the Pando Monte Lirio project would yield limited information beyond what is already documented. The CAO concludes that this case does not merit an audit of IFC’s due diligence of its involvement linked to the project. The case is closed with no further action.