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Press release
22 December 2008 - For immediate release
A recent independent NGO report on the World Bank-funded Lanco Power
Station project in Chhattisgarh, India shows serious negative consequences
for local communities, including loss of land, polluted rivers and
receding water levels. The project is funded by the private sector
arm of the World Bank, the International Finance Corporation (IFC),
which adopted in 2006 a new set of social and environmental safeguards,
which the report finds have not been properly applied.
The project was given a 'Category A' rating by the IFC due to potential
significant adverse social or environmental impacts. In four affected
villages where people depend on small-scale agriculture as the main
basis of their livelihoods, local families lost a third of their land
to the project.
The first phase of land acquisition in 2005 was deeply flawed. It
occurred without sufficient consultation or provision of appropriate
information to the affected peoples. Despite this the IFC approved
an $8 million equity Lanco investment in June 2007 and in May 2008
approved a further $100 million investment for a long-term IFC-Lanco
partnership that will impact on communities across India.
The 'Category A' rating, and the fact that the project impacts on
indigenous peoples, imposes strict responsibilities on both Lanco
and the IFC. This report found serious failures to adhere to these.
Through discussions with affected communities, the study found that
Lanco failed to provide adequate information to local communities
and made promises about jobs and compensation that the communities
say have not been delivered; the company published inaccurate social
and environmental assessments two years after the start of construction.
The flawed social assessment stated, for example, that indigenous
adivasis in the local villages have no spiritual or cultural ties
to the land. The report shows that this is categorically wrong as
several adivasi groups and households maintain ceremonial relations
with land acquired for the project.
The IFC failed to adequately verify the existence of community support
by accepting 'No Objection' certificates (a measure of consent in
the villages) that were obtained when only 10-15% of the villages'
voting population were present. It also failed to apply the special
requirements triggered when projects affect the traditional or customary
lands of indigenous peoples. This raises serious questions about when
and how the IFC standards are triggered.
Despite the concerns described in this study, Lanco is currently
identifying land to be acquired as part of a further 600MW expansion
project.
Devjit Nandi, one of the authors of the report, said:
'Very little has changed since the field research was conducted
for this report earlier in 2008. Lanco has cheated by promising
many things to the local communities that they have failed to deliver.
The IFC is hand in hand with Lanco. They have visited, but it is
not clear if they are really listening to the communities.
During the recent election in Chhattisgarh, neither of the political
parties addressed the violations of peoples' rights by the Factory.
The desperation of people, particularly of youths, is high. Villagers
have started to bribe the local administration so that they can
gain employment in the factory, so affected people have lost out
twice. First they lost their livelihoods through the acquisition
of land and now they are paying to get jobs.'
Liam Taylor, co-author of the report, said:
'This study finds serious shortcomings in the assessments conducted
by Lanco, both before the project began, and since. This resulted
in the flawed application of IFC's safeguard measures. This case
demonstrates the vital need for robust and credible social assessments
independently scrutinised by affected communities and qualified
third parties, before they are accepted by the IFC. In this case
most of the communities were completely unaware of any assessments
having been published.'
Tom Griffiths, Forest Peoples Programme, said:
'This report is part of a wider FPP review of projects where IFC's
Performance Standard on Indigenous Peoples has been applied. The
IFC's sustainability policy requires that its staff ensure that
there is Broad Community Support before a project is financed, but
this case shows that the IFC is making such judgements based on
flimsy evidence. The Lanco case shows that much more rigorous implementation
procedures are required to ensure full compliance with IFC social
policies and its new Performance Standards. Careful and continuous
monitoring is also vital, as is the knowledge of communities about
the rules that should govern the behaviour of the IFC and the companies
that borrow its money.'
With the IFC's own review of its Sustainability Policy due to begin
soon, to report in June 2009, the timing of this critical NGO report
is important. The report makes clear that the IFC must do considerably
more to ensure that it adheres to the standards that it has set itself.
Also recently launched is a new community guide on the IFC's Performance
Standards relevant to indigenous peoples that has been developed by
Forest Peoples Programme. This guide informs indigenous peoples about
their rights and about the IFC's policy commitments, so enabling them
to negotiate if an IFC funded company plans to develop on or near
their lands.
- Ends -
For further information or to arrange an interview please contact:
In the UK:
Amarantha Pike: +44 (0)1608 652893 amarantha@forestpeoples.org
In India:
Devjit Nandi: 0091-6678244478 devjeetn@hotmail.com
Notes to Editors:
- Link to the full report Sustainable
development or business as usual? A critical evaluation of the IFC-funded
Lanco Amarkantak Thermal Power Station Project in Chhattisgarh (India)
- Link to A
Community Guide to the International Finance Corporation's Performance
Standard 7 on Indigenous Peoples (PS7)
- Chhattisgarh is one of the poorest states in India. The Lanco
project is part of the State government's focus on industrial and
infrastructure development to make it 'the Power Hub of India'.
Korba, the location for this project, is at the centre of this strategy.
The Indian economy grows at a rate of 9% per year, increasing demand
for electricity, and causing power shortages.
- In the drive for economic growth the rights and needs of people
are often disregarded. Nearly 80% of Chhattisgarh's 20.8 million
people live in rural areas, including 32% who are 'Scheduled Tribes'
under India's constitution. The acquisition of land has caused the
physical and economic displacement of thousands of people.
- Lanco Amarkantak Private Power Limited (LAPPL) is part of Lanco
Infratech Limited (LITL), an Indian infrastructure development company
with interests in power, construction and property development.
It currently has six operational power plants with nine further
projects under implementation, giving it a presence in 10 states.
It plans a 22-fold expansion in its energy portfolio by 2013. It
is one of the fastest growing companies in India.
- The International Finance Corporation (IFC) is part of the private
sector lending arm of the World Bank. Its new Policy on Social and
Environmental Sustainability and its Performances Standards came
into effect in May 2006.
- Forest Peoples Programme (FPP) is an international NGO, founded
in 1990 to promote forest peoples' rights. FPP supports forest peoples
in their efforts to secure and sustainably manage their forests,
lands and livelihoods. For further information visit the website
at www.forestpeoples.org
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