After a yearlong investigation, the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism at the World Bank Group’s International Finance Corporation (IFC), issued a damning report that found serious lapses in the IFC’s $450 million loan for the 4,000-megawatt Tata Mundra coal-fired power plant in Gujarat, India.
The CAO report upheld the complaints of local fishing communities, which have been struggling with severe health effects and the loss of livelihoods due to the project. But instead of withdrawing from the Tata Mundra power plant, or at a minimum, offering reparations to residents and drafting a rehabilitation plan, World Bank President Dr. Jim Yong Kim abandoned his obligation to the affected communities and instead signed off on a response – written by the same people who approved the project at the IFC – dismissing the CAO findings.
Tata Mundra is a failing project. Even its backers admit it is running at unsustainable losses. Now, the company is asking for a bailout from the Indian government in the form of higer electricity rates for consumers to cover the costs, putting the price of electricity beyond the reach of the people it was supposedly built to help.
It is time for the IFC and Predident Kim to recognize the CAO findings and draft a real action plan that addresses the harm done to communities.
Coal "lock-in," rather than rational investments in coal power, is one of the largest global threats today. This lock-in results from high capital costs and long asset lifespans associated with coal-fired power plant investments. Over the past six years due to large scale public opposition, mounting costs, and dramatic changes in the energy market, an irrational coal lock-in was successfully averted in the US and the EU. However, excessive coal reliance is now becoming a serious economic, as well as long-term environmental and public health threat, to China, India, and other parts of the developing world.
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