India: Tata's Mundra goes under full World Bank audit

Published by MAC on 2012-08-13
Source: Machimar Adhikar Sangharsh Sangathan (MASS)

Tata Mundra Project Under Investigation

If Social and Environmental Policy Violations are Confirmed, Project Could Face Serious Repercussions

Machimar Adhikar Sangharsh Sangathan (MASS) Press Statement

6 August 2012

New Delhi - After a year of preliminary enquiry, and first of its kind in India for any projects, the recourse mechanism of International Finance Corporation (IFC) of the World Bank Group, the Compliance Advisor Ombudsman (CAO) has ordered a full investigation into the serious social and environmental policy violations by the Coastal Gujarat Power Ltd (CGPL - Tata Mundra project). Machimar Adhikar Sangharsh Samiti (MASS) welcomes the decision.

With this, the first Ultra Mega Power Project in India to get clearance, Tata Mundra, which is running the risk of turning financially non-viable due to the decision of Indonesian government for revising its coal export pricing structure, which effectively doubled prices, is on dock for its poor social and environmental track-record, something which they camouflage behind claims of ‘responsible corporate citizen'. In the case of full investigation confirming the policy breaches, the project could face serious repercussions.

The key focus of the investigation, among others, will be on:

• whether the IFC exercised due diligence in reviewing CGPL's environmental and social assessments
• whether IFC gave adequate consideration to the cumulative impacts o Adani Power and the construction of the Mundra West Port
• whether IFC's assessment of community support for the project was adequate, and
• whether policies of IFC was correctly applied with regard to the complainants' seasonal fishing settlements and fish drying areas

In June 2011, the people's movement of fishing communities , MASS lodged a complaint with the CAO, raising the issues of failure to recognize large number of people as affected, loss of livelihood of thousands of fishworkers, pollution and health hazards due to fly ash, colossal destruction of mangroves and violation of environmental clearance.

"We are happy that CAO recognized the serious violations and have ordered a full investigation into it. We hope that they will go to the bottom of issues, investigate impartially and stop financing this project which is threatening the livelihood of thousands of fishworkers and the fragile ecology of Kutch", said Bharat Patel, General Secretary of MASS.

While CAO identified key issues for investigation, we are disappointed that they decided not to look into the issues of salt-pan workers and grazers, who are also seriously impacted by the project, citing a technical reason that MASS raised these issues only in the rejoinder to the original complaint. Considering the capacity of local communities, whose access to detailed and timely information is seriously impaired, CAO should have looked into all impacts of the project, irrespective from where the information came in and when. After IFC financing a project, destroying lives of people, the onus of identifying all negative impacts should not be on the affected communities. We hope CAO will look at the issues comprehensively and not in piecemeal.

CAO in its report says about IFC being satisfied with the additional clearances the company obtained for changing the closed cycle cooling system into open cycle cooling system, in which the water is released to the sea at higher temperature than normal, which is detrimental to fish and other aquatic life. Any change of technology should have warranted a new Environmental Impact Assessment, including public hearings. We are not aware of any such. We hope CAO will enquire about the process which preceded change of technology.

Last month an eminent panel, after an independent fact finding visit to the affected areas and after extensive discussion with the company as well as communities, released its report, confirming serious social and environmental issues, depletion of fish catch since the project was commissioned, possibility of high radiation from fly ash, the company's failure to conduct a cumulative impact assessment, communities were not adequately consulted and the project has blocked the access to fishing and grazing grounds. The panel recommended to the government to declare a moratorium on all projects in the region and recommended IFC to stop financing the project, until a comprehensive review is conducted.

The project is financed by IFC, Asian Development Bank, Korean ExIm Bank, State Bank of India, India Infrastructure Finance Company Ltd, and other Indian banks.

In case the full investigation confirms policy breaches, there is no justifiable ground for the IFC (and even other financiers) to continue funding this disastrous project. Withdrawal is a sensible option they can make since the damage this project has created is beyond repair, says MASS.

Contact: Bharat Patel - +91-9426469803