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World Bank Inspection Panel Findings on Vishnugad Pipalkoti Hydro Electric Project

October 1, 2014


Villagers from Haat village have built themselves new and more modern homes across the river.  

World Bank

The Inspection Panel, the World Bank’s independent accountability mechanism, has found that the Bank was in broad compliance with its own policies while preparing the Vishnugad Pipalkoti Hydro Electric Project (VPHEP) in Chamoli district of Uttarakhand and that it had, in fact, introduced some best practices in the project. The Inspection Panel was examining charges made by some individuals living in the vicinity of VPHEP that the World Bank did not follow its internal policies and procedures while assessing the possible impacts of the 444 MW hydropower project.

The report of the Inspection Panel, which was discussed by the World Bank’s Board of Executive Directors on 30 September 2014, also highlights various initiatives taken by the Government of India to assess the cumulative impacts of its hydropower development program in the upper reaches of the Ganga River.  The report also recognizes as good practice the Government’s decision to raise the environmental flow requirement (the mandatory amount of water to be kept in the river by a hydropower project) for VPHEP to 15.65 cumecs.  It also suggests the need for closer coordination of projects across the Alaknanda Basin, where the VPHEP is located, possibly through a river basin management approach.

The Inspection Panel investigation confirms that the Bank is broadly in compliance with its policies and procedures on VPHEP, and identifies two areas (details below) where additional measures will be required to achieve full compliance.  World Bank management has committed to providing monitoring and supervision to help address the areas of concerns raised by the Panel as well as any other issues that may arise during project implementation so as to enhance the sustainability and viability of the Project.

The Inspection Panel is an independent accountability mechanism of the World Bank that can be approached by individuals or communities if they believe that they have been, or are likely to be, adversely affected by a World Bank-financed project as a result of the Bank’s noncompliance with its internal policies and procedures.

The Vishnugad Pipalkoti Hydro Electric Project:

VPHEP is a run-of-river hydropower generation scheme on the Alaknanda River in Uttarakhand that will on completion generate an estimated 1,665 million kilowatt-hours of electricity each year to help relieve India’s chronic power shortage.  The 444 MegaWatt Project will also help reduce India’s greenhouse gas emissions by 1.6 million tons each year, compared to a thermal plant of the same capacity. 

VPHEP is being developed by THDC India Ltd and financed by a US$ 648 million loan from the World Bank.  The Bank’s Board of Executive Directors approved the Project for financing in June 2011 and the loan became effective in November 2011.

Findings of the Inspection Panel

Areas of Policy Compliance

  • Environmental Impacts: The Panel found that the Bank had complied with its policies regarding the assessment of the cumulative impacts of the hydropower program in the Alaknanda Basin.  It also recognized that the minimum environmental flow of 15.65 cumecs stipulated for VPHEP by the Government of India in June 2011 would help mitigate cultural, religious and biodiversity impacts.

  • Risk relating to Structures from Tunneling: The Panel noted the decision to use a tunnel boring machine (TBM) – as opposed to the conventional method of blasting -- was a proactive step that would help reduce potential harm from vibrations while the tunnel is excavated. The Panel also found that adequate studies had been undertaken to mitigate the possible risks to the houses and other structures of villagers living in the project area. It also noted the provision that houses and other structures in a 500-metre corridor along the proposed tunnel would be covered by an insurance scheme.

  • Risks relating to Landslides & Seismicity: The Panel noted that a number of studies related to landslides, seismicity and dam safety had been carried out and mitigation measures specified where necessary. 

  • Risk to Aquatic Life & Ecology: With respect to the claim about the project’s impacts on fish and aquatic fauna from the diversion of water into the tunnel, the Panel said that the mandated minimum environmental flow of 15.65 cumecs would help mitigate adverse impacts on aquatic life and fish population in the project stretch of the river.  It also noted that fresh flows from the Birahiganga River would help restore nutrients to the Alaknanda downstream of the tailrace tunnel. The Panel also commended the study undertaken to assess the movement of sediment bedload during extreme weather events and recommended that the analysis be further deepened during the project construction period.

  • Gender-related Impacts: Access for women to van panchayat or community forest land is important in this area as it is women who predominantly use them to collect fuel and fodder for their households. The Panel recognized that the Project’s impact in this respect will be marginal for most households as most villages will lose access to less than 2.5 percent of this community forest land.  While noting the provision under the project to provide project-affected families with a yearly allowance to cover this loss of access to fuel and fodder, the Panel stressed the need for close monitoring to ensure that women are not disproportionately impacted by any potential changes to their van panchayat in light of the heavy burden women are likely to face if access to forest and forage resources becomes more difficult. It also recommended continued attention to make sure that the safety of women in the project area is not affected by the influx of construction labor.

  • Grievance Redress Mechanism: The Panel found that the requirement of establishing an appropriate and accessible grievance mechanism had been met.

  • Local Benefit Sharing: The Panel found that important efforts were being made to ensure that the wider community living in the project area also benefits from the Project.  It noted the importance of the various benefit-sharing schemes relevant for the project: THDC’s CSR program; provision of 100 kWh of free electricity per month to affected households in the 18 Project affected villages for a period of 10 years; and the provision in the National Hydropower Policy that 1% free power from the Project (with a matching contribution from the state government) to be earmarked for a Local Area Development Fund to ensure a regular revenue stream for welfare schemes, creation of additional infrastructure and common facilities. The Panel also noted the need for clarity on the use of these royalty payments and the revenue generated so that project-affected villages and others will benefit from these initiatives. The Panel further noted the importance of assessing the impact of the project on host communities at the end of the Resettlement Action Plan (RAP) implementation.

Areas of Non-compliance

  • Assessment of the Risk of Potential Water Loss: The Panel found that adequate baseline studies to document village water sources along the tunnel alignment routes had been conducted and that the Project developer THDC India had also committed to provide alternative water sources in the event that an existing water source is lost. However, the Panel found that the Bank did not adequately detail the mitigation measures that could be operationalized if a water source dried up as a consequence of project construction.

    Proposed Action:  The Bank will continue to ensure that existing water sources are regularly monitored and that appropriate arrangements for alternative water are available should any of the current sources dry up as a consequence of project activities.

  • Resettlement and Livelihood Restoration: Some 265 families will be relocated as a consequence of land acquisition for VPHEP; of these, 242 (or 92 percent) are families from the village of Haat that voluntarily chose to move.  The Panel noted that resettlement and rehabilitation efforts for these families were underway and almost half of the eligible families had already received their R&R assistance (at the time of writing their report). It also highlighted the need for ongoing attention to the restoration of livelihoods for the resettled community of Haat village. On Hatsari, a hamlet of eight households, the Panel recognized the developer’s ongoing efforts to reach a settlement with the affected families, including by redesigning project infrastructure to minimize the limited construction impacts on the residents of Hatsari.  The Panel however was of the opinion that the Resettlement Action Plan prepared did not adequately assess the situation at Hatsari, given given the fact that, unlike other resettled families, most of them do not own land elsewhere. The Panel recognizes, the Bank’s concern for the Hatsari issue to date and the fact that negotiations are still continuing to bring closure for the only habitation that has yet to reach a settlement with the project developer on resettlement.

    Proposed Action: THDC has offered several options to the affected households of Hatsari.  The Bank will continue to monitor the relocation options that the Hatsari community selects and ensure that these are implemented as planned.  

Other Issues for World Bank Attention:

  • Transmission Lines. The Panel noted that project documents did not address the proposed 30 km transmission line which will evacuate power from the Project to the Kuwari Pass pooling station, and also the wider proposed power transmission system in the area.

    Proposed Action:  The evacuation lines will be needed only when VPHEP is operational and the Bank will work with the developer THDC India Ltd as well as with the national transmission utility POWERGRID and other relevant stakeholders to ensure that its impacts are adequately studied and addressed. 

  • Slurry Disposal. The Panel was of the opinion that the use of the TBM will result in the excavation debris emerging in the form of ‘slurry’ as opposed to the ‘muck’ generated by conventional excavation methods.

    Proposed Action:  THDC and the civil works contractor will analyze the composition of the slurry and take appropriate measures to ensure that no slurry from the TBM operation flows into the river.