By Lucie Pinson, Friends of the Earth France and Yann Louvel, BankTrack, 8 December 2015
The Tata Mundra coal-fired power plant in India is one of the largest power plants in Asia and for years now has been the subject of much controversy. The first of the Indian government’s so-called UMPP plants, an ambitious series of ‘ultra mega power plants’ to be rolled out all across the country, it was launched in 2008 and has been fully operational since 2013.
And it’s been seven years of controversy since BNP Paribas, the World Bank, the Asian Development Bank and several Indian banks decided to finance the project in 2008 in spite of its many risks. Faced with the environmental and social impacts of the plant, directly affected local communities took steps against the World Bank in 2011, and then against the Asian Development Bank in 2013. In addition to the 30 million tons of carbon dioxide emitted annually by Tata Mundra, the construction of the plant itself caused the polluting of rivers, the destruction of mangroves, and seriously affected the lives of local fishermen who have lost their livelihoods. All this to see electricity prices increase instead of the better access to electricity that was promised.
Today’s birthday, then, of World Bank president Dr Jim Kim, and the Pinocchio Prize picked up by BNP Paribas in the last few days in the ‘Local impacts’ category, provide an opportunity to reflect on the current status of the Tata Mundra project and the demands of communities that still remain unsatisfied.
These communities, which have seen their rights being violated while no redress has been forthcoming, can no longer be satisfied by the voluntary reporting of Tata Power and its funders. Indeed, since 2011, departments within both the World Bank and the Asian Development Bank have published numerous reports acknowledging the violations taking place at Mundra in Gujarat.
After a long period of silence, BNP Paribas said in its response to receiving the Pinocchio Prize last week that it had been in discussions with Tata in 2013 and 2014 but acknowledged that the situation had not been resolved despite declarations of ‘good will’ made by the company. BNP Paribas however places responsibility for the project on the World Bank and the Asian Development Bank: in the absence of criteria and not having adopted the Equator Principles at the time, BNP Paribas assumed the presence of these public donors was the guarantee of a responsible project. In reality, BNP Paribas confirmed to have had at the time “already established environmental and social risk assessment practices and procedures for its Project Finance activity”.
In parallel, BNP Paribas now recognises the findings of the reports of the two multilateral banks and their action plan, as well as the fact that “certain subjects, in particular the impact on fishermen, cannot be considered settled at this stage.”
After more than two years of prevarication, the time has come for action and it would now be more intolerable than ever for BNP Paribas to continue to hide behind the fine words emanating from Tata and thus avoid assuming its full responsibilities.
BNP Paribas has acknowledged that it sent a letter to the managing director of Coastal Gujarat Power Ltd (CGPL, the special purpose vehicle set up to run the plant’s operations) in May this year and subsequently intensified discussions with Tata Power’s management as well as the World Bank in order to monitor developments at the plant, particularly concerning the remedial action plan.
As responsibility has its origins in transparency, we urge that these exchanges between the banks and the Tata Mundra companies be made public. In addition, the action plans to which BNP Paribas refers are not new and have not brought about any significant improvement for the impacted communities.
We therefore call on BNP Paribas to commit to no longer provide financing and financial services to Tata as long as the following requests are not carried out:
- the establishment of a closed cycle cooling system at the plant;
- the conducting of an independent and comprehensive assessment of social and environmental impacts (one that does not involve consultants hired by the company);
- compensation, on the basis of this new study, for people who have already suffered losses.
If BNP Paribas has indeed finally sent a warning shot to CGPL, it is now high time for the bank to get things done for the local communities, and to do so promptly.
More broadly, the Tata Mundra case is yet one more which illustrates the limits of the environmental and social policies of financial actors for monitoring the impacts of inherently risky energy sector activities. There is one clear solution – the end of bank financing for dirty energy, starting with the coal sector.