CAO to continue monitoring Tata Power's Mundra project

World Bank Group's audit arm CAO will continue to monitor steps taken to address various environmental and social issues related to Tata Power's 4,000 MW Mundra power plant where IFC has invested USD 450 million.

The move comes after CAO concluded that actions taken by the International Finance Corporation (IFC) were not "sufficient" with regard to addressing concerns over environmental and social impact of the Mundra project.

In its response, the IFC -- a lender to the Gujarat-based Mundra Ultra Mega Power Project (UMPP) -- has agreed with conclusions of the CAO.

The Compliance Advisor Ombudsman (CAO) reviews complaints from communities affected by development projects undertaken by IFC and the Multilateral Investment Guarantee Agency - the private sector lending arms of the World Bank Group.

In its audit report released in October 2013, CAO had raised various concerns over environmental and social impact of the Mundra project. Following the same, IFC came out with an action plan in November 2013.

While acknowledging actions taken by IFC since then, CAO last month said they are not "sufficient".

In a communication to the lender, the CAO said there is a need for rapid, participatory and expressly remedial approach to assessing and addressing project impacts raised by the complainants.

The CAO audit was done following a complaint from Machimar Adhikar Sangharsh Sangathan (MASS) and the Association for the Struggle for Fishworkers' Rights.

"Such measures are not well developed in IFC's reporting which focuses on the commissioning of technical studies as well as corporate social responsibility measures implemented by the client," it noted.

Further, the CAO said technical non-compliance findings regarding the application of pollution control standards have not yet been addressed.

Citing these aspects, CAO said it would "keep this audit open for monitoring... And plans to issue a follow up monitoring report" no later than November 2015.

When contacted, Tata Power in a statement said CAO report reflects the observations on the internal processes of IFC.

"The Mundra plant is fully compliant on all environmental and social norms and the same has been endorsed by Ministry of Environment and Forests and other statutory bodies and is committed to being a neighbour of choice," the company said.

Mundra project is being implemented by Coastal Gujarat Power Ltd (CGPL), a wholly-owned subsidiary of Tata Power.

IFC said that it agrees with the CAO's conclusion.

"In the first monitoring of implementation of the action plan, the CAO has concluded that it needs to continue monitoring the project.

"Since most of the studies in the action plan are currently underway, IFC agrees with CAO's conclusion," IFC said in a statement.