IFI governance

News

World Bank fails to take action on Eskom risks

3 July 2012

The World Bank board has declined to take immediate action over identified issues on water availability, air quality and community services related to Eskom, the South African state-owned electricity utility, and its Medupi coal-fired power plant (see Update 80, 70). The decision was made after reviewing an investigation by the Inspection Panel, the Bank’s compliance body, of the Bank’s $3.75 billion loan to the project, which found instances of non-compliance or inconsistency with Bank policies, including in addressing water and air externalities. The Bank agreed to support project implementation by working with the government, but according to US-based NGO the Bank Information Center, it “declined to provide an action plan to address [affected communities’] concerns”. In June, environmental groups groundWork, Friends of the Earth and Earthlife Africa Johannesburg expressed concern over “the fact that the Bank does not see it critical to call for immediate action when evidence of damage is already visible”. Makoma Lekalakala of Earthlife Africa warned that “this loan and Medupi is the final wedge that is going to result in this place being the next sacrifice zone for elite development in South Africa … Medupi is not going to power homes but rather will power the expansion of the dirty industry in the area.”