Apr 102015
By Yann Louvel and Greig Aitken, BankTrack, 10 April 2015

Just a couple of days ago we were bravo-ing BNP Paribas as it and fellow French banks Crédit Agricole and Société Générale confirmed they have ruled out financing for highly controversial coal mine projects in Australia’s Galilee Basin. Whether this shunning of major coal financing will be a watershed moment for the French banks remains to be seen. Along with our colleagues at Friends of the Earth France, who’ve set up a petition site for French bank customers to urge their banks to commit to end all coal sector financing by the end of this year, we’re certainly intent on keeping up the pressure following this big Gallic Galilee success.

Yesterday, though, we’ve had another reminder – from India – of BNP Paribas’ hefty coal finance legacy: it’s not for nothing after all that the bank currently sits at number 9 in our Top 20 Coal Banks rankings, having provided over 15 billion euros to both coal mining and coal power companies in the period 2005 to April 2014.


Community life under the gaze of the Tata Mundra power plant. Photo by Joe Athialy, Bank Information Center, February 2014.

Back in the news is an important BankTrack dodgy deal – the Tata Mundra Ultra Mega Power Plant, a coal plant in Gujarat with a mammoth installed capacity of 4,000 megawatts that has been financed in recent years by, among others, the World Bank’s private sector arm the International Finance Corporation (IFC) and BNP Paribas.

Another Tata Mundra investor, the Asian Development Bank (ADB), has just this week seen its Compliance Review Panel issue a damning report on ADB’s involvement in the power project, citing a catalogue of violations that are heavily impacting the livelihoods of fisherfolk, among others. The initial suggestions, according to MASS, the local group that has been actively engaging with the ADB, are that ADB management has reacted high-handedly to its own compliance report, echoing previous shenanigans at the World Bank following a similar internal compliance roasting over Tata Mundra.

As Nezir Senani reported in the Huffington Post back in January this year, dating back to August 2013 alarm bells have now been raised twice within the World Bank about Tata Mundra and its impacts on local people and their environment (let’s not even get into the greenhouse gas emissions that those thousands of megawatts have been generating since March 2013 when the plant became fully operational). As Nezir points out, however, there’s clearly a struggle going on between the IFC’s internal affairs people – under its Compliance Advisor Ombudsman office – and the actual bankers involved in Tata Mundra.

Which brings us to BNP Paribas, that arranged $327 million financing for Tata Mundra in April 2008. The French bank informed BankTrack that a scheduled annual ‘tracking’ of Tata Mundra is underway, and should address how Tata Power is avoiding and remedying the project’s environmental and social impacts.

That, however, is all we’ve heard for now from BNP Paribas on Tata Mundra. If, when and how it will publish its assessment, we do not yet know.

Leaving aside the startling jump in coal finance that our ‘Banking on coal 2014’ report revealed at the end of last year, when it comes to communicating with the commercial banking sector regarding its coal interests, things of course have a tendency to move rather more slowly.

Enquiries to banks about whether they are considering finance for the latest alarming mega-coal project (eg, Rampal in Bangladesh) will – most of the time – be batted back at you with a polite reference to ‘commercial confidentiality’. It’s the standard bank justification for not permitting any meaningful disclosure of information as to whether Bank X views potential Project Z as: a) ‘crazy’, b) ‘bankable’ … or c) even a bit of both.

The onus is surely, though, on banks to be responsive and pro-active when it comes to projects that they have actually financed – especially when the deals in question are proving to be problematic. Typically, and Tata Mundra is no different on this count, such problems will have been predicted by both local communities in the firing line and campaigners alike.

The longer BNP Paribas drags its heels and keeps mum on Tata Mundra, the more the questions about this controversial coal investment continue to mount – and the more affected local communities are left hung out to dry.

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