Tatas’ Mundra power project: Ombudsman of international funders talks tough on non-compliance to environmental, livelihood norms

MASSBy Counterview Desk

The Office of the Compliance Advisor Ombudsman (CAO) for the International Finance Corporation (IFC), which is part of the World Bank group, has, in its fresh report, released on October 23, 2013, said that there is enough reason to believe in evidence provided by the Machimar Adhikar Sangharsh Sangathan (MASS), or the Association for the Struggle for Fishworkers’ Rights, regarding environmental and livelihood concerns of the people of Mundra, Kutch district, where the $4.14 billion dollar project the Tatas’ Ultra Mega Power Plant is being implemented. The concern is significant as the IFC is financing $450 million in the form of “a straight senior loan”.

While welcoming the CAO report, MASS has said, “The findings reconfirm the concerns we raised since project construction started. CAO’s expert findings help bolster our fight to regain the damaged livelihoods of thousands of fishing families in Kutch coast.. It failed to account fisher people as project-affected people, to adequately assess and mitigate environmental and livelihood impacts, and to comply with mandatory performance standards and national regulations, among others. Dispute resolution attempts did not work, leading CAO in 2012 to do a compliance appraisal, which concluded that MASS complaint merited a full investigation.”

While CAO report falls short of calling for IFC’s withdrawal from the project, the CAO has found much truth in the complaints made by MASS against the project, which being implemented in the name of the Tata Power’s subsidiary, the Coastal Gujarat Power Ltd. (CGPL). These complaints related to:

(a)      Failure to identify the complainants as project-affected people during preparation of the project

(b)      Physical and economic displacement of fisher people from seasonal settlements and fish drying areas in the intertidal zone

(c)       Impact of coal ash and other airborne pollution on fish drying and public health

(d)      Alleged lack of compliance with national regulations in relation to the decision to construct a once through cooling system

(e)      Impacts on marine environment and long-term decline in fish stocks due to destruction of mangroves and construction/operation of the plant (especially the cooling system)

(f)       Failure to consider expansion of Mundra Port as an associated development or to consider the investment in the context of cumulative impacts of related developments

(g)      Impacts on additional livelihood groups (namely, graziers and salt pan workers) that were not adequately identified or mitigated

(h)      Social impacts of increases in the cost of power beyond that which was projected in the project documentation

(i)        Failure to consider technically and financially feasible design alternatives to minimize economic and social (E&S) impact

(j)        Adequacy of IFC’s supervision of E&S aspects of the project.

env-mundraThe CAO’s report underlines, “The (UMPP) project was assigned IFC’s environmental and social category A, signifying that it has potential significant adverse social and/or environmental impacts that are diverse, irreversible, or unprecedented. In the context of the complaint, it is significant that the coastline around Mundra is undergoing rapid industrial transformation. In addition to the construction of the CGPL power plant, this involves the development of the Adani Group’s Mundra Port and Special Economic Zone (MPSEZ), which includes significant expansion of existing port facilities and the construction of a 4620 MW coal-fired power plant (Adani Power).”

More specifically, the report says, “The complainants are identified as fisher people belonging to the minority Wagher community of Muslims, a group characterized by the Government of India as a socially and educationally backward caste”, adding, “Also relevant is their migratory lifestyle, which is dependent on natural resources. As asserted in the complaint, the fisher people traditionally migrate from often distant home villages to the bunder (fishing harbours), where they live during a fishing season of eight to nine months each year.” In this context, “improper mitigation or insufficient community engagement” were identified as possibly triggering “opposition from project-affected communities or unacceptable environmental impacts.”

CAO report notes that the E&S assessment documentation, including the Stakeholder Engagement and Benefit Sharing Study (focusing on Tragadi village), and the Needs Assessment of Modhva village (both published in 2011), “lack an assessment of the impact of the project on the fishing communities of these villages.” Further, “these reports contain no baseline data with regard to the households living seasonally on Tragadi bunder or Kotadi bunder.” In fact, CAO finds that the IFC’s review of its client’s E&S assessments was not “commensurate with risk in relation to fisher people seasonally resident on Tragadi and Kotadi bunders as required by the sustainability policy.”

Directing its guns towards the Tata Power’s financiers, the CAO report states, “The IFC paid insufficient attention to the requirements of the Performance Standards — that the client prepare an adequate, accurate and objective assessment of all relevant E&S risks and impacts of the project based on appropriate social baseline data.” It finds this to be of particular concern “in relation to the complainant communities, given that they are statutorily recognized as educationally and socially disadvantaged and acknowledged by IFC to be vulnerable.”

Without any baseline assessment of these communities, CAO says, “Neither IFC nor its client (Tata Power) is in a strong position to refute or respond to claims regarding the impact that the project is having or will have on households.” In fact, given the nature and scale of the project – the proximity of the cooling water intake/outfall channels to the seasonal fishing settlements (on the bunders), the content of the ESIA material available to IFC, and documented concerns raised by fisher people regarding the impacts of the project since 2006 – CAO insists it is not convinced by the IFC’s position that “the risk of adverse impact to these households was so slight as not to require objective assessment.”

CAO particularly notes the IFC’s believed “the seasonally resident community was reluctant to engage in a study of the type undertaken for Tradagi and Modhva…” and that the Tata Power “is actively engaged with MASS (…) to address their concerns [and] undertake a survey.” Disagreeing with such a view of the IFC, the report asserts, “While a baseline survey and impact assessment at this stage would be positive remedial measures”, there was the need for a “thorough assessment of potential social and environmental impacts and risks from the early stages of project development”. CAO finds that the affecting communities were engaged late, making the “rigorous E&S assessment difficult”.

In fact, the CAO says, the IFC “engaged with this project based on the view that it will have no or negligible negative impact on the communities living seasonally on the bunders. Thus IFC’s verification focused on those villages losing land to the main project site. As a result, IFC did not pay adequate attention to verifying whether pre-project consultation requirements were met in relation to groups (including fisher people) that had been identified in the E&S assessment process as project affected community resource users resident outside these villages.”

In fact, consultations with the fishing communities “occurred after key decisions in relation to the design of the cooling system had been made”. In these circumstances, the IFC “failed to assure itself that directly affected fishing communities were engaged in effective consultation.” In particular, the consultations should have been “based on the prior disclosure of relevant and adequate information, including draft documents and plans” and “should begin early in the Social and Environmental Assessment process”. In relation to these findings, CAO disagrees with the IFC’s view that “while the process could have been better, the outcome is consistent with the performance standards, This only suggests that there is lack of effective consultation with fishing communities early in the project cycle process resulted in missed opportunities to assess, avoid and reduce adverse potential adverse impacts of the project.”

Tata Power Mundra UMPPTaking into account the nature of the project and IFC’s identification of these risks, CAO further finds that the IFC’s E&S review regarding marine impact “did not meet the due diligence requirements set out in the sustainability policy”. In particular, CAO finds that IFC’s E&S review was not “appropriate to the nature and scale of the project” or “commensurate with risk”. As a result, CAO says, “important opportunities were missed to: (a) request more detailed baseline information about the marine environment of the affected area; (b) incorporate appropriate analysis of the potential marine (and associated social) impact of the project into design considerations and the client’s E&S management system; and (c) develop a framework to support adequate marine impact monitoring (specifically, monitoring that goes beyond gross changes to marine ecological receptors).”

In fact, the CAO notes, “No mixing zone was defined in the marine environment impact assessment (MEIAs) or subsequently; thus compliance cannot be demonstrated. Projections that the thermal plume from the (UMPP’s) outfall channel will extend a distance of kilometres into the shallow waters of the gulf and surrounding estuaries suggest inadequate mixing/cooling, with significant risks of ecological impact. These risks are heightened by claims that the plume will intersect with components of the ecosystem which the complainants assert are important to their livelihoods.”

CAO says, the IFC acknowledges “drifts and other local nets are commonly used by local fishermen community”, yet “the livelihoods of these communities are not further documented in the MEIA.” Actually, the MEIA’s focus was more “on larger scale commercial fishing operations which are conducted further off shore. The result is a conclusion that the impact of the project on fisheries is likely to be “minor and non-consequential” while at the same time predicting that the marine ecology of the inshore area local to the plant (where the complainants assert to fish) will be negatively affected during construction and operation.”

Hence, the CAO believes that the statements in the Socio-Economic Assessment appended to the comprehensive environmental impact assessment (CEIA, 2007) – that “the livelihood of fishermen will not be affected” – are similarly “not supported by analysis of the livelihoods of the complainant fishing communities. In fact, it is premised on the assumption that “disposal of treated effluent from desalination plant and cooling system will not have any impact on local ecology and marine life, if disposed to deep sea through a properly designed out fall structures”. CAO notes, this raises concern regarding the organizations that conducted the impact assessments that IFC relied on – the Tata Consulting Engineers’ (TCE), which is a part of the Tata Group. It says, “This weakens the case that the CEIA was an external expert assessment”.

CAO also notes “confusion in relation to how the CEIA measured ambient air quality”. In the methodology section, the CEIA reports that ambient air samples were collected twice a week over 52 weeks from March 2006 to February 2007. “At other points in the report, however, reference is made to data from three seasons between March 2006 and February 2007. “Similar confusion exists in ADB’s 2007 Environmental Assessment Report for the project, which states that samples were collected twice a week over the 52 weeks from March 2006 to February, at the same time as noting that the monsoon season was not considered for the purposes of the EIA”, the report adds.

This leads one to conclude, says CAO, that “it was unclear to IFC at appraisal whether ambient concentrations of particulate matter exceeded National Ambient Air Quality Standards (NAAQS) standards (though the three-season average was trending approximately 13% above the annual average standard).” In fact, data indicated that “the airshed was degraded according to the applicable Thermal Power Guidelines”; and the Tata Power’s E&S consultant has “reported since at least May 2009 that both NAAQS and IFC ambient air standards are being exceeded”. In addition to being noncompliant, CAO finds that “IFC’s approach to the issue of air quality represents a minimalist interpretation of its standards, which is at odds with a stated rationale for its involvement in the project, namely, improved E&S performance through compliance with standards that are more stringent than national requirements.”

— Rajiv Shah


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