World Bank Approves India Dam Against Wishes of Local People

Ann Kathrin Schneider
Tuesday, October 12, 2004

On October 12, the World Bank’s executive board approved a $45 million loan from their private sector arm, the International Finance Corporation (IFC), for a controversial hydropower project in the Indian Himalayas. The loan was approved despite the launching of an investigation into the project by the IFC’s ombudsman. Local people and Indian non–governmental organizations had called for the project to be delayed until numerous grievances and irregularities are resolved.

"We are afraid that with the dam in place, we will not have enough drinking water and that there will be too little water left for our fields. We fear that the project could even destroy our livelihoods," says Sundar Mahant, from Jagatsukh village, downstream of the proposed dam.

The 192 megawatt Allain Duhangan hydropower project is being built across two tributaries of the Beas River in the mountain state of Himachal Pradesh.

The Jagatsukh villagers filed a formal complaint with the IFC’s independent Compliance Advisory Ombudsman (CAO) in September. They charged that the project’s environmental assessment was flawed and incomplete and that necessary consultations with project–affected people had not been held. Their complaint also states that Jagatsukh has not given the "No Objection Certificate" to the project required under state law.

On October 5, villagers from Jagatsukh wrote to World Bank President James Wolfensohn urging him to delay the decision on Allain Duhangan until the CAO has investigated their complaint. Two days prior to loan approval, the CAO decided that the villagers’ complaint warranted an independent assessment of the project.

An Indian consultant hired by the IFC gave numerous recommendations on measures needed if the project were to meet IFC standards and local laws. These recommendations have not been complied with.

Himanshu Thakker, an analyst with the Delhi–based South Asia Network on Dams, Rivers and People, has shown that the dam’s power will not be required for up to 20 years due to a spate of recent investments in hydropower for India’s northern grid. Thakker also shows that planners have consistently exaggerated India’s future power needs.

This is the first large dam project in India to be approved by the World Bank since 1989. It comes against a background of a strong push by the World Bank to increase its lending for "high–risk/high–reward" infrastructure projects and to weaken its social and environmental guidelines.

"The new infrastructure approach of the World Bank will indeed be "high risk" – but low reward – if it means pushing unnecessary projects with shoddy environmental assessments and without addressing the concerns of local communities," says Ann Kathrin Schneider, South Asia campaigner for International Rivers.

"The Bank should at least have delayed this project until the CAO’s investigation was complete and the local community concerns resolved. Now the loan is approved we fear that the CAO’s recommendations will be ignored by project officials."

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