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Questions and Answers About the Vishnugad Pipalkoti Hydro Electric Project and the Inspection Panel

January 10, 2013

Updated Jan. 25, 2013

Why is the World Bank supporting the Vishnugad Pipalkoti Hydro Electric Project (VPHEP)?

More than 350 million people in India do not have access to electricity, and VPHEP is part of the government of India’s efforts to increase power generation to meet unmet electricity demands and continue powering economic growth in the country. VPHEP will add 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 coal-fired plant of the same capacity. 

World Bank Management believes VPHEP is a sustainable hydropower project with manageable impacts and has been prepared in accordance with Indian statutory requirements and World Bank policy guidelines.  The project has demonstrated several good practices that have been recognized by India’s National Green Tribunal and can be incorporated into other similar hydropower projects.

However, the World Bank respects the concerns of any individuals or groups who believe they have been, or are likely to be harmed by any Bank-financed project. The Inspection Panel is an independent accountability mechanism that such persons can approach for possible redress of their grievances.

Is the World Bank investigating once again the manner in which India develops a major hydropower project?

No. The Inspection Panel’s mandate is to assess whether the World Bank complied with its own policies during the preparation or implementation of a project.  It is not an investigation into how the project developer or the government manages a project. The Inspection Panel is an 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 non-compliance by Bank staff with the institution’s internal policies and procedures. The Inspection Panel reports to the World Bank’s Board of Executive Directors.

Does this mean that work on VPHEP will be suspended or stopped while the investigation is under way?

No, work on VPHEP will not be suspended or stopped while the investigation process is under way. Major construction work on the project is yet to start, as the project is awaiting Second Stage Forest Clearance from the government of India. Once that clearance is obtained, civil works can begin.

If the Inspection Panel investigation concludes that the Bank did not comply with its policies while preparing VPHEP, can it recommend that the World Bank withdraw from the Project?

No, even if the Inspection Panel finds that the World Bank has not complied with any of its own operational policies, the Inspection Panel does not have jurisdiction to recommend a cancellation of the project, which is governed by legal agreements between the World Bank and the government of India, THDCIL, and the government of Uttarakhand. If the Inspection Panel investigation concludes that the Bank did not comply with its operational policies in the preparation of VPHEP, it will recommend to the Bank’s Board of Executive Directors that appropriate corrective measures be undertaken by the Bank in a time-bound manner in collaboration with the project implementing authorities.   

Several other complex infrastructure projects financed by the World Bank have had similar Inspection Panel investigations and have gone on to be implemented successfully. 

What is the Inspection Panel’s mandate?

Read about the Inspection Panel’s mandate on its website.

What are the criteria used by the Panel to assess the eligibility of a Request for Investigation made to it? What are the next steps in the Inspection Panel process?

Read about the Inspection Panel process on its website.

What are the World Bank’s operational policies?

World Bank projects and activities are governed by operational policies, which are designed to ensure that these projects are economically, financially, socially and environmentally sound. The Bank's Operational Manual spells them out, and provides guidance on how to comply with them. Among the key types of policies cataloged in the manual are:

  • Policies on business products and instruments, which establish rules for lending instruments, country economic and sector work, technical assistance, grants, guarantees and other Bank products.
  • Safeguard policies, which include policies and guidelines designed to avoid and where not possible to avoid, mitigate adverse impacts of Bank-supported projects on people and the environment. There are 10 specific safeguard policies that address involuntary resettlement, indigenous peoples, environmental assessment, forests, natural habitats, pest management, cultural property, , and safety of dams. Projects on international waterways and projects in disputed areas are also covered by these safeguard policies.
  • Fiduciary policies, including rules governing financial management, procurement, and disbursement. There are also detailed guidelines for the selection of consultants and the procurement of goods and works in projects financed by the World Bank.
  • Management policies covering such areas as project monitoring and evaluation.
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