Report on The Project Financing of Sasan Power Limited

This is a report of the inspection conducted into Reliance’s Sasan Power Project in Singrauli Madhya Pradesh by Office of Inspector General, Export Import Bank of the United States. This inspection was conducted in accordance with the 2012 Quality Standards for Inspection and Evaluation as defined by the Council of Inspectors General on Integrity and Efficiency.

In the report “Report on Project Financing of Sasan Power Limited” dated September 2015,the Office of Inspector General of the US ExIm bank, it has been confirmed that Ex-Im Bank’s Chairman expressed his continued disappointment to the CEO of Reliance regarding the “poor safety” practices at the Project. In particular, the Chairman’s letter stated, “the number of all fatalities at the integrated Project is now 19—which is both tragic and absolutely unacceptable.” Despite that, nothing changed on the ground

Final Sasan Report – Redacted

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Srijan Lokhit Samiti Reponse to the report on Sasan of OIG ExIm Bank

This is a response to the report on Sasan Power Limited of Office of Inspector General of the Export-Import Bank of the United States by Srijan Likhit Samiti along with other national and international organizations. SLS has demanded that the case is to be re-investigated. Since OIG does not have the expertise or capacity, an independent team should be formed, with experts recommended by both Ex-Im and NGOs and a time-bound enquiry be held.

Response to OIG Sasan Report – December 2015

Letter to Ex-Im Inspector General Sasan Project 22 Jul 2014

July 22, 2014

Acting Inspector General Michael McCarthy

Office of Inspector General

Export-Import Bank of the United States

811 Vermont Avenue, NW

Washington, DC  20571

 

Dear Inspector General McCarthy:

We are writing to follow up on a meeting with the Office of Inspector General held on May 28, 2014, in which non-governmental organizations (NGOs) discussed our concerns regarding the harmful impacts of the Export-Import (Ex-Im) Bank-financed Sasan coal power project on the affected communities and the environment.  The undersigned NGOs respectfully request that the Office of Inspector General conduct a full investigation and issue an Inspection Report assessing compliance with Ex-Im policies including, but not limited to, environmental, social, human rights and anti-corruption policies.

In August 2010, the Ex-Im Bank approved over $900 million in financing for Reliance Energy’s 3,960 MW Sasan power plant and associated mine.  Since then, NGOs have documented numerous accounts of corruption as well as human rights and labor violations associated with the project, and communicated this information to the Ex-Im Bank.[1]  In addition, these groups reported that a former Indian government official – who allocated the Moher basin to Reliance Energy (for use as a dedicated coal mine for Sasan) under questionable circumstances – left his position shortly after to accept a job at the coal power plant.[2]

It is important to note that Reliance Energy has a history of non-compliance and has been linked to many controversies in the telecommunications, power, and oil and gas sectors, and insider trading.  Most notably, in August 2012, the Comptroller and Auditor General of India (CAG) issued a report, which states that the government decision approving Reliance Power’s use of excess coal from the three blocks allocated for the Sasan project violated the conditions set forth in the bidding process and resulted in undue benefits to Reliance Power.  An investigation is now being undertaken by India’s Central Bureau of Investigation.

Despite these reports and other information providing evidence of Reliance’s corrupt practices and the environmental and human rights abuses associated with the Sasan project, Ex-Im staff and management have not taken any meaningful action to address the concerns raised.

In fact, when the Ex-Im Bank conducted a site visit in April 2012, staff met with Reliance Energy in Singrauli.  Ex-Im representatives initially offered to visit and meet with the affected communities, but later reversed course and offered to meet with community members on the condition that they travel to the hotel where the Ex-Im representatives were staying.  Given that most community members had no means of reliable transport and also feared that the hotel was not a safe place for them to speak, the meeting did not take place and the communities’ voices have not been heard directly.

Environmental and Social Impacts of the Sasan Coal Power Project

Given Ex-Im’s lack of accountability and oversight, NGOs conducted two field visits to Singrauli in January and May 2014, where they met with company officials and affected community members.  Based on the information gathered during these visits, it is evident that Reliance Energy has failed to comply with Ex-Im’s environmental and social policies, including the IFC Performance Standards and the Equator Principles, in its development of the Sasan project.  Reliance Energy has also failed to deliver on commitments made in its Environmental and Social Impact Assessment (ESIA).  The following is a non-exhaustive account of these violations.

Impacts on Local Communities/Involuntary Resettlement:  The treatment and resettlement of affected communities is an issue of pressing concern.  Community members who protested against the forced relocations were subject to intimidation and harassment (in one case, the person disappeared and was never found).  Houses were demolished in the middle of the night while families were still living in them.

Residents who were forced to leave their homes did not receive compensation or received insufficient compensation.  In many cases, community members were not provided housing at resettlement colonies.  For those who were provided housing, many were deprived of basic necessities to which they formerly had access, such as water pumps and schools.  In addition, rather than being given priority in project hiring and training, local community members were denied jobs in favor of contract workers from other states.

Elderly residents have not received their pensions as promised.  Children have not received their education stipends and, in some cases, have been actively blocked from attending school.                                                                                                                                                                                                                          Health and safety of laborers:  The health and safety and overall protection of workers have been wholly disregarded.  Reliance Energy has hired contract workers from other states, which means that accidents may not be investigated given that family members do not learn of the workers’ injuries or deaths until long after these accidents occur.  In addition, there have been several reports of irregularities in worker time stamps – several workers who received injuries or suffered deaths were not clocked in, and therefore their injuries were not documented as having occurred while on the job.  In addition, workers who handle toxic materials such as coal ash have reported skin diseases, indicating that the necessary safety precautions are not being taken.

Free, Prior, and Informed Consent:  Reliance Energy did not obtain the free, prior, and informed consent (FPIC) of the indigenous peoples who were forcibly relocated by the project.  While the ESIA states that these families did not rely on forest lands that were cleared for the mine, community members return daily to the area where they used to live to collect traditional plants and other means of subsistence, despite massive boulders rolling down from the mine overburden above.  Many people remain in temporary housing, and have not been moved to resettlement colonies.  Others have refused to leave or returned to the edge of the project site because they were resettled to places where they cannot live.

Cumulative Impacts:  There is a critical need to assess how the Sasan project will contribute to the cumulative environmental and social impacts in the region.  Existing coal mines and coal power plants (producing more than 12,000 MW) are responsible for severe toxic pollution and thus health impacts on the local communities.  In a 2011 study by the Centre for Science & Environment, Delhi, high levels of mercury and other contaminants were found in fish from the Rihand reservoir, in groundwater supplies, and in paddy and wheat grown in the area.  Mercury was found in all of the men and 75 percent of the women who were tested – the average level of mercury was 34.3 ppb, nearly six times the limit set by the U.S. Environmental Protection Agency.  Other heavy metal contaminants were also found to be high.  As a result, many local people in villages such as Chilika Daand suffer from diseases caused by exposure to mercury and other heavy metals.

Means of Recourse for those affected by the Sasan Coal Power Project

Ex-Im’s environmental and social policies incorporate IFC Performance Standards and Equator Principles, among other things.  Both the IFC Performance Standards and the Equator Principles require clients to establish a grievance mechanism that provides an effective means for affected peoples and communities to raise their concerns and have them addressed.  However, Reliance Energy’s failure to provide an accessible grievance mechanism as well as Ex-Im’s failure to address concerns raised by NGOs on behalf of the communities has allowed these human rights and labor violations to continue.

Further, the U.S. Department of State must issue a human rights clearance for all Ex-Im projects.  However, it is unclear whether and how the clearance process identified the risks associated with the Sasan project, given the nature and extent of human rights abuses that have occurred.  It is also unclear whether the State Department has taken any action to address these abuses, since neither the Ex-Im Bank nor the State Department have publicly disclosed any human rights clearance documents for the project.

*****

The Ex-Im Bank has contributed to the lack of transparency surrounding the Sasan project by failing to disclose Reliance Energy’s reports as well as its own monitoring reports.  Pursuant to Ex-Im’s Environmental and Social Due Diligence Procedures, Reliance Energy is required to submit various documents to Ex-Im during construction and operation (e.g. environmental and social management plans, supplemental environmental reports, related monitoring reports), which must be made available upon request.[3]  However, despite requests made by Pacific Environment and Sierra Club in 2010 and 2014 respectively, the Ex-Im Bank has only provided the Greenhouse Gas Studies for the mine and power project, the ESIA for the power project, and a partial ESIA for the mine.

Without access to these documents, it is nearly impossible to assess reported pollution levels, though anecdotal evidence indicates there may be severe contamination.  For example, while the ESIA states there will be minimal coal dust from the conveyor belt that transports coal from the mine to the power project, nearby plants were visibly covered in coal dust.  In addition, local residents have reported impacts on health and livelihoods as a result of coal dust and ash blowing into their houses at the resettlement colonies.

The investigation of the Sasan project is particularly important given that the Ex-Im Bank is considering whether to finance another large-scale coal power plant and mine (Tilaiya) owned and operated by Reliance Energy.  Following in Sasan’s footsteps, this project has reportedly resulted in displacement without adequate compensation, arrests of non-violent protestors, and other violations of the Bank’s environmental, social and human rights policies.

For these reasons, we request that the Office of Inspector General conduct a full investigation and issue an Inspection Report – and as part of the investigation, we request that the Inspector General consult with those affected in their communities where they can more freely discuss the project’s impacts.  The Ex-Im Bank must show that the Sasan project complies with its environmental and social policies – and should this prove impossible, we request that the Ex-Im Bank withdraw its support for the project.

Sincerely,

Joe Athialy, Bank Information Center

Madhuresh Kumar, NAPM

Eva Filzmoser, Carbon Market Watch

Alyssa Johl, Center for International Environmental Law

Doug Norlen, Friends of the Earth US

Nicole Ghio, Sierra Club

Awadhesh Kumar, Srijan Lokhit Samiti

References:

[1] Among other things, these accounts include the death of 30 workers reportedly caused by a smokestack collapse as well as the disappearance of community members who protested forced relocations.  Nicole Ghio, Sierra Club India Trip – Part 3 of More Perspectives (Apr. 14, 2011), available at http://sierraclub.typepad.com/compass/2011/04/sierra-club-india-trip-part-3-of-more-perspectives.html; see also Anuradha Munshi, Sasan Ultra Mega Power Project, Singrauli, Madhya Pradesh: A Brief Report (Sept. 2013), available at https://lokhitsamiti.files.wordpress.com/2013/10/sasan-report-final.pdf.

[2] Sierra Club India Trip.

[3] Ex-Im Bank, Environmental and Social Due Diligence Procedures and Guidelines, Dec. 12, 2013, at Section 1.9(C).