Tata Mundra: making a mockery of accountability

20 June 2014 | Guest comment

Settlement overlooking the Tata Mundra coal power plant. Photo: Sanjeev Thareja

In the 1990s, India pushed mega power projects (MPPs) to address the power crisis. These were of 1,000 MW or more, and catered to more than one state. When the MPP policy was falling short of fulfilling India’s power crisis, all the government did was to add the prefix ‘ultra’, and came up with UMPPs. UMPPs were characterised by 4,000 MW generating capacity, a colossal rise over the MPPs. The first realisation was the Coastal Gujarat Power Limited (CGPL), a wholly owned subsidiary of Tata Power Limited, in Mundra, Gujarat. Powered by supercritical technology, this 4,000 MW plant has been in the news for generating more controversies rather than power.

This $4.14 billion project is funded through external commercial borrowings, with the International Finance Corporation (IFC, the World Bank’s private sector arm) and the Asian Development Bank pumping in $450 million each. The plant functions on imported coal from Indonesia, and with changed coal export regulations in the source country, generating electricity has become dearer, prompting CGPL to approach the Central Electricity Regulations Commission (CERC) to request a hike in tariff structures from the one initially quoted that helped them win the contract in the first place.

As if this were not enough, something else propelled CGPL as a thorny issue, attracting widespread global attention and condemnation, the issue of the callousness of the IFC towards its own accountability mechanism, the Compliance Advisor Ombudsman (CAO). Acting on a complaint filed by Machimar Adhikar Sangharsh Sangathan (MASS), a local organisation of around 25,000 affected people, the CAO started an investigation in 2011 to verify alleged breaches of the IFC’s social and environmental policies.

The callous attitude of the IFC and CGPL has made a mockery of the accountability mechanism, and with the World Bank president shutting his eyes, those affected have no recourse left. Bharat Patel, MASS, and Himanshu Damle, BIC

In October 2013, the CAO published its findings validating the claims made by MASS of the IFC’s leniency in adequately assessing the impacts on the seasonal fishing community, the majority of which happen to be from a religious minority. This inadequacy excluded the people from falling within the proper ambit of the IFC’s performance standard on land acquisition.

The CAO observed: “IFC should have required that its client commission additional E&S [environmental and social] assessment in order to ensure compliance. … IFC did not pay adequate attention to verifying whether pre-project consultation requirements were met. … IFC failed to assure itself that directly affected fishing communities were engaged in effective consultation. … IFC’s E&S review regarding marine impact did not meet the due diligence requirements set out in the sustainability policy. … IFC failed to meet the requirements of the sustainability policy despite sufficient indications of project-related displacement (both physical and economic) as to require objective assessment. … IFC is unable to demonstrate that its client’s monitoring is commensurate to risk.”

The IFC in its response to the CAO findings dismissed the report, defending its client and justifying its investment. To add further insult to injury, World Bank president Jim Yong Kim not only sat on the CAO report for close to a month, but eventually acquitted the IFC from any wrongdoing. This not only undermined the investigations of the CAO, but also marginalised the issue of thousands of fisherfolk and families who lost their means of livelihood.

To highlight this injustice, an intense concerted effort from civil society organisations around the world has built up, culminating in a petition signed by more than 24,000 people and presented at the World Bank’s spring meetings in April. The petition demands urgent actions to restore, rehabilitate and resettle, provide adequate compensation, and that the IFC pull out of the project, acknowledges its lapses and refuse to finance any expansion. So far the IFC has hinted that it will not be financing the expansion.

As the CAO cannot recommend, only bring to light the IFC’s faults, its report has not really changed the reality on the ground. Growing activism against the Bank’s inaction has highlighted that the IFC’s so-called action plan on Tata Mundra is a non-starter and ignores precisely what it has been asked to rectify. The callous attitude of the IFC and CGPL has made a mockery of the accountability mechanism, and with the World Bank president shutting his eyes, those affected have no recourse left. Their lives are getting darker by the day, and whatever electricity produced at the plant at whatever loss, makes nothing brighter for them.

by Bharat Patel, Machimar Adhikar Sangharsh Sangathan, and Himanshu Damle, Bank Information Center, India