The World Bank Board of Directors discussed on May 22 the findings of the Inspection Panel’s investigation of the Medupi coal-fired power plant in South Africa, built and operated by power utility Eskom. Local communities and their representatives submitted the official complaint to the World Bank’s accountability mechanism just prior to approval of the $3.75 billion loan in April 2010.
The Inspection Panel’s report validated many of the communities’ concerns about serious harm that could result from the operation of this mega project, in particular impacts on air quality, health, and the availability of water, as well as strains on local infrastructure in the nearby town of Lephalale.
Despite the serious potential impacts identified by the Panel and constructive suggestions from communities, World Bank management declined to provide an action plan to address these concerns, arguing that South African institutions are capable of handling problems when they arise.
At the Board’s insistence, management provided a “supplementary note” limited to detailing supervision and reporting requirements. Perhaps most troubling, the supplementary note suggests the planned scheme for a second phase to provide water for “sulfur scrubbers,” agriculture and municipal services may be scrapped. Management insists that the first phase of the water scheme, under construction, will be sufficient to meet the needs of the project, though this contradicts the Bank’s original assessment of water needs and the Panel’s findings.
In spite of requests from several Board members, management refused to provide project-specific progress reports to the Board and will keep the Board informed about the project and eventual problems only in the context of more general reports about lending to South Africa.
World Bank Press release on Board Discussion
Inspection Panel’s Overview of Investigation Report
Eskom coal plants might be at risk by Londiwe Buthelezi, Business Report, May 29, 2012