Global NGOs unhappy over WB support to Tata's Mundra UMPP

Seek withdrawal of IFC funding from the Tata Power's 4,000 Mw power project in Gujarat

After Indian NGO, as many as 68 civil society groups from 28 countries have condemned the World Bank Group’s continued support for Tata Power's 4000 Mw ultra mega power plant (UMPP) in Mundra, Kutch, despite the Ombudsman for International Finance Corporation (IFC) finding serious lapses by IFC in supervision of the coal-base power project, impacting environment and livelihood of local fishing community there.

The global groups in an open letter to World Bank President Dr Jim Yong Kim, Friday last, have further demand that IFC be held accountable for the lapses by taking appropriate actions to address the findings of the Ombudsman, starting with development of a remedial action plan and the withdrawal of IFC financing from the Tata Power's power project in Mundra.

The action by civil rights groups from across the world comes on the heels of a letter from over 100 civil society groups in India demanding that the World Bank Group’s IFC withdraw funding from the Tata Power's project in Gujarat.

In its audit report for the power project, released last month, the Compliance Advisor Ombudsman (CAO) for the IFC and the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group, had also held that IFC's review of project's environment and social assessments was not commensurate with project risk as required under its Sustainability Policy.

IFC had refuted the charges levied by CAO and justified its actions and funding to the power project operational under banner of Coastal Gujarat Power Limited (CGPL), a fully owned company of Tata Power.

Commenting on open letter by global civil society groups spokesperson for Tata Group said, "CAO report reflects the observations on the internal processes of IFC & thus it will only be appropriate for IFC to respond. We are yet to read through the report & would discuss with IFC if there were any issues related to CGPL. As per initial information available with CGPL, MASS (the Association for Fish workers' Rights) has certain generic issues concerning the coastline of Gujarat. Mundra UMPP is just about 1% of Kutch coastline & we are more than responsive in our association with the community around our project & we remain committed to working with the community at all times."

"Mundra plant is fully compliant on all environmental and social norms and the same has been endorsed by MOEF and other statutory bodies and is committed to being a 'neighbour of choice'," the spokesperson further added.

In the open letter sent to Kim the global civil society groups have asked, "As concerned World Bank stakeholders and contributing taxpayers to our respective government’s official aid through the Bank, we are disturbed by your clearance of IFC response to the CAO report on the Tata Mundra coal power project. In solidarity with the Indian fishing communities, we demand an explanation why you rejected the CAO findings on IFC’s policy violations in funding the Tata Mundra coal power plant."

"Unless the findings from the World Bank Group’s internal watchdogs, like the CAO and the Inspection Panel, are taken seriously and acted upon, their role is in name only. This decision undermines the mandate of CAO while allowing staff and management to avoid culpability. Civil society around the world demand you hold the IFC accountable by taking hard but appropriate actionsto address the CAO findings, starting with the development of a remedial action plan and the withdrawal of IFC financing from the Tata Mundra coal project," the groups demanded.

In its audit of Tata UMPP, the CAO had found "weaknesses in IFC’s environment and social (E&S) review of CGPL did not support the formation of a robust view as to whether the project could be expected to meet the requirements of the Performance Standards over a reasonable period of time, the threshold question in terms of IFC’s decision to invest."

"Weaknesses in IFC’s E&S review process also meant that required opportunities to consider alternative project designs to avoid or minimize E&S impact were missed," the CAO stated in its findings.

IFC has invested $450 million of its own capital in this project, which it has classified as a category A project, signifying that it believes there are potentially significant adverse social and environmental impacts that may be diverse or irreversible. IFC was also considering investing up to $50 million in equity as part of its exposure to the project and syndicating up to about $300 million in loans.