24fl4 June 1998 OVERVEWJUNE1 998 for the WQ0KLTh [Z4 EkHiX International Bank for Reconstruction and Development & International Development Association lT he Inspection Panel is a Processing requests resolutions of the Bank's board of three-member body creat- executive directors (the Board) ed in 1993 to provide an Requests for Inspection are that created the Pantel.? Because independent forum to private processed as follows: this is the first body of its kind to citizens who believe that they or give voice to private citizens in their interests have been or could The Panel receives a request an international context, the be directly harmed by a project and decides whether the Panel's operations and role con- financed by the World Bank.' request is within its mandate. tinue to evolve. That means that Affected groups and people may a The Panel sends the request to the Panel's operational proce- present their concerns through a Bank Management, who pre- dures and its operations need to Request for Inspection to the pare a response to the allega- be innovative and fluid. Panel. lions and submit it to the Twelve formal requests have The Panel's method of func- Panel. been received since Panel oper- tioning is laid out in Operating a The Panel makes a preliminary ations began in September 1994. Procedures developed by the review of the request, conducts The texts of Panel reports are Panel members to implement the an independent assessment of publicly available. the merits of Bank Management's response to it, 1. References to the "World Bank" or 'Bank" Who can file a request and recommends to the Board include the International Bank for Recon- whether the claims should be struction and Development (IBRD) and the At minimum requesters must investigated. International Development Association (IDA) show i n writing that: umreq2 The Boards of the TBRD and IDA are respon- show in writing that: a If the Board approves a recomi- sible foroverall pohcya nd operatons and are mendation to investigate, the composed of representatives (Executive • They live in the project area (or Panel proceeds with the investi- Directors) from both borrower and non- represent people who do) and gation. bcrrower member countnes with weighted are likely to be affected voting power according to the level of their adversely by project activities. a When the Panel finishes an capital subscriptions investigation, it sends its find- o They believe that actual or likely ings to the Board and to Bank harm results from failure by the Management. Bank to follow its policies and procedures. a Bank Management then has six weeks to submit its recommen- o Their concerns have been dis- dations to the Board on what cussed with Bank management, actions the Bank should take in and they are not satisfied with response to the Panel's find- UwW g the outcome. ings. Detailed steps are explained in the a Based on the Panel's findings NM u Panel's Operating Procedures. and Bank Management's rec- JB8I &3 ommendations, the Board takes the final decision on what should be done. t ,lx[ I N S P E C T I O'N P A N E L R E S U L T S Who1 { a De A11e P a ne me( 1111mb@$ers The first three Panel members were appointed in April 1994 by the Executive Directors on the basis of their knowledge of and experience with development and their ability to deal thoroughly and fairly with complaints. Every year the Panel selects one of its members as a chairperson. Dr. Ernst-Giunther Brbder served as chairman for the first two years, from 1994 to July 1996. Mr. Richard E. Bissell served as chairman from August 1996 to July 1997. The present chairman, Dr. Alvaro Umania Quesada, replaced Mr. Bissell at the end of his nonrenewable three-year term in July 1997. Alvaro Umaiia Quesada is the current Ernst-GDnther Broder is the former Jim MacNeill is a policy advisor on the chairman of the Inspection Panel. president (1984-93) and director environment, energy, management, and Mr. Umaha was formerly professor and (1980-84) of the European Investment sustainable development to international director of the Natural Resources Bank. He has held several supervisory organizations, governments, and Management Program at INCAE, a Latin and consultative positions in international industry. He is chairman of the American graduate school of manage- banks and other institutions. Mr. Broder International Institute of Sustainable ment. He served as Costa Rica's first was a governor of the European Bank for Development and a member of the minister of natural resources from Reconstruction and Development from boards of the Woods Hole Research 1986-90 under President Arias. Mr. 1991 to 1993 and a member of the Center, the Wuppertal Institute on Climate Umaha is a member of the boards of the special advisory group for the Asian and Energy Policy, the Environmental Rockefeller Foundation and the World Development Bank in Manila from 1981 Education and Training Institute of North Resources Institute. He has published to 1982. He is a member of the Panel of America, and Ontario Hydro. He was several books and many technical articles Conciliators for the International Centre secretary general of the World on energy, the economics of natural for Settlement of Investment Disputes, Commission on the Environment and resources, and the environment. Washington, D.C. Before being appointed Development (the Brundtland Mr. Umahia is a private entrepreneur in president of the European Investment Commission) and a major author of the the ecotourism and conservation areas Bank he served from 1964 to 1984 with commission's world-acclaimed report, and is involved in sustainable wildlife the Kreditantstalt fur Wiederaufbau in "Our Common Future." He served for reproduction and export. He holds a Frankfurt, where he was a member of the seven years as director of environment Ph.D. in environmental engineering and a managing board from 1975 to 1984 and for the Organization for Economic master's in economics from Stanford a spokeperson since 1980. He has Cooperation and Development. Earlier, he University. He also holds a master's in written and coauthored several books and was a deputy minister in the government environmental pollution control and a articles on financial and economic of Canada. Mr. MacNeill holds a graduate bachelor's in physics from Pennsylvania subjects. Dr. Br6der holds a doctorate in diploma in economics and political State University. Mr. Umaha's tenure economics from the University of science from the University of Stockholm expires August 1,1998. Freiburg and studies political and natural and bachelor's degrees in science (math- sciences at the Universities of Cologne, ematics and physics) and mechanical Mainz, and Paris. engineering from Saskatchewan University. Qa inn2 niFfmi1 nMfiLC ienmmmh Nn oriAn, oniPi, P N S P E C T D 0 N P A N E L R E S U LT S Name of request Registered Panel recommendation Board decision Last action 1 Nepal/Arun III Yes 10/94 Investigation Approved Panel reports 12/94, 6/95 2 Ethiopia/Expropriation No 5/95 - 3 Tanzania/Power Yes 6/95 No investigation Agreed 4 Brazil/Rondonia Yes 6/95 Investigation Not approved Review by Panel 3/97 5 Chile/Pangue No 11/95 - Panel report 6/95 6 Bangladesh/Jamuna Yes 8/96 No investigation Review in 12 months Pending 7 Argentina and ParaguayNacyretA Yes 10/96 Investigation Not approved Reviewed by Panel 9/97 8 Bangladesh/Jute Yes 11/96 No investigation Agreed 9 Brazil/Itaparica Yes 3/97 Investigation Not approved Review 1998 10 India/NTPC Yes 5/97 Investigation Approved/limited Report sent 12/97; decision pending 11 India/Ecodevelopment Yes 3/97 Pending 12 Lesotho-South Africa/Highlands Yes 5/98 Pending NOTE: Summaries are available on the Panel's Web site, from the Panel office, or from World Bank offices around the world (see back page). The texts of Panel reports are publicly available. 1 Request Nepal: Proposed Arun III Hydroelectric Project (1994) Requesters Group of Nepalese citizens and residents of the project area Date filed October 1994 Project description Building a 201 megawatt power station in the Arun Valley, which required construction of a long access road through the valley Claims of harm Lack of adequate economic evaluation; harm to the environment and indigenous people; unnecessary involuntary resettlement Policies allegedly violated OP/BP 10.04; BP 17.50 and 10.00 Annex A; OD 4.01; OD 4.20; OD 4.30 Inspection Panel findings Project alternatives not adequately examined; insufficient environmental and social preparation Outcome Board authorized limited investigation. After the Panel report, management withdrew support for the project. Significance First Request for Inspection. It established precedents on eligibility and processing of Requests for Inspection. Summary Presented in October 1994, the request alleged violations of IDA's policies on environmental assessment, involuntary resettlement, and indigenous peoples, among others. The main gf300-0 Ed S P E C T I O N PA N E L R E S U LT S complaints were related to the overall economic impact and to construction of the access road (needed to build the 201 megawatt power station) in a valley where there were no roads and significant environmental and cultural resources, including rich ethnic diversity. IDA management's response to the request denied any acts or omissions in violation of its policies. The Panel disagreed. In this first request, the Board accepted the Panel's recom- mendation for an investigation but restricted it to alleged violations of environmental assess- ment, involuntary resettlement, and indigenous people policies. The Panel's review focused on the main impacts of the project related to the access road. In June 1995, after the Panel had submitted its report, Management reassessed the proposed project and decided to with- draw its support. Although the Board did not authorize an investigation into the analysis of economic alterna- tives that had been conducted for the project, the Panel's report pointed out that project alternatives had not been considered with the same level of effort and therefore that a "real- istic comparison of the risks associated with the proposed project and its alternatives could not have been carried out." The Panel pointed out that alternatives, such as smaller hydroenergy-based solutions, were not adequately analyzed. The project would have been the largest project ever undertaken by Nepal. Total investment was estimated at more than $1 billion-nearly equivalent to Nepal's annual budget, in a country with a per capita annUAl income of approximately $200 Given the country's low level of electrification, the demand for power did not justify such a large investment, and expected power sales to India-necessary to guarantee an adequate economic rate of return-were uncertain. Considerable international attention was paid to this project, and nongovernmental organiza- tions (NGOs) took an active role in questioning the project's economic viability and environmental and social impacts. 2 Request Ethiopia: Compensation for Expropriation of Foreign Assets in Ethiopia Requesters A Greek family with investments in Ethiopia Date filed March 1995 Project description IDA's lending program Claims of harm Lack of compensation for expropriation of assets and blocking of bank accounts Policies allegedly violated OMS 1.28, OP/BP 17.50, OMS 1.19 Inspection Panel findings Request not eligible Outcome Panel made no recommendation. Significance First request based on IDA's lending program Summary In April 1995 the Panel received this request, which alleged that IDA had violated provisions of Operational Manual Statement 1.28 by extending credits to Ethiopia and now was nego- THE INSPECTION PANEL INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H Street NW Phone: (202) 458-5200 INTERNATIONAL DEVELOPMENT ASSOCIATION Washington, D.C. 20433 Fax: (202) 522-0916 USA ipane1@worldbank.org@intemet '"4TACT: Eduardo G. Abbott relephone: (202) 458-5200 FIRST CHAIRMAN OF THE INDEPENDENT INSPECTION PANEL MR. ERNST-GONTHER BRODER TO CHAIR PANEL AGAIN Washington, D.C. July 31, 1998-The members of the Inspection Panel unanimously elected Mr. Emst-Gunther Broder to serve as Chairman of the Inspecton Panel ("Panel") for a year beginning August 1, 1998. Mr. Br6der replaces Mr. Alvaro Umana Quesada, who served as Chairman of the Panel from August 1, 1997 to July 31, 1998. Under the terms of the Resolution that established the Panel, Mr. Br6der served as the Panel's first Chairperson. Mr. Br6der is the former President of the European Investment Bank (EIB), Luxembourg from 1984 to 1993, where he also served as a director from 1980 to 1984. He held several supervisory and consultative functons in intemational banks and other institutions. Mr. Br6der was a Govemor of the European Bank for Reconstruction and Development, London from 1991 to 1993, and a member of the special advisory group for the Asian Development Bank, Manila from 1981 to 1982. He is a member of the Panel of Conciliators for the Intemational Centre for Settement of Investment Disputes, Washington, D.C. He started his professional career in the Managing Board's staff of the Bayer Corporation from 1956 to 1961 and served in the Technical Operations Departments Industry Division of the Wodd Bank from 1961 to 1984 in the Kreditantstalt fMr Wiederaufbau in Frankfurt, where he was a member of the Managing Board from 1975 to 1984 and its spokesman since 1980. He has written and co-authored several books and articles on financial and economic subjects. Mr. Br6der holds a Doctorate in Economics from the University of Freiburg, and studied political and natural sciences at the Universities of Cologne, Mainz, and Paris. For more information on the Inspection Panel, please visit our website: http:/Aww. worldbank.org (search 'Inspection Panel) or call the World Bank Public Information Center (202) 458-5454 THE INSPECTION PANEL INTERNATIONAL BANK FOR RECONSTRUCTION AND OEVELOPMENT 1818 H Street; NW Phone: (202) 458-5200 INTERNATIONAL DEVELOPMENT ASSOCIATION Washingtan, D.C. 20433 Fax: (202) 522-0916 USA ipanel@woddbank.org(intemet CONTACT: Eduardo G. Abbott Telephone: (202) 458-5200 GHANAIAN APPOINTED TO WORLD BANK'S INSPECTION PANEL Washington, July 28, 1998-Prof. Edward S. Ayensu, a Ghanaian national, was appointed by the Wodd Bank Executive Directors for a five year temi as a member of the independent Inspection Panel. He replaces Mr. Alvaro Umaha Quesada, who concludes his four year term on July 31, 1998. The other members of the Inspection Panel are Messrs. Emst-GQnther Brdder, and Jim MacNeill. Professor Edward S. Ayensu is President of the Pan-African Union for Science and Technology and an intematfonal development advisor. He held many important positions during his 20 years at the Smithsonian Institution in Washington, D.C. He is Executive Chairman of Edward S. Ayensu Associates Ltd. - Science, Technology and Economic Consultants and Executive Chairman of Advanced Gracewell Communications Co. Ltd. and the founding Chairman of the Afrcan Biosciences Network. He is Chairman of the Ghana National Biodiversity Committee. He is also a member of the Intemational Advisory Council on Global Scientific Communicatons, UNESCO and member of the Board of Directors and Intemational Vice Chairman of the Intemational Institute for Sustainable Development (IISD). In addition, he has held various posts in other intemational scientific and technical organizations. For neadly two years he was the Senior Advisor to the President and the Director for Central Projects Departmnent at the African Development Bank. He was formedy the Vice-Chairman, and advisor to he Scientific and Technical Advisory Panel of the Global Environment Facility - a multi-billion dollar fund administered by the World Bank, UNDP, and UNEP. He is a former member of the Energy Sector Management kssistance Programme Consultative Group which is administered by the World Bank and UNOP, and of the Senior \dvisory Council of the Global Environmental Facility (GEF). Prof. Ayensu obtained his doctorate degree from the Jniversity of London. Fhe Inspecton Panel is an independent entity established by the World Bank's Board of Executive Directors in 1993 to help ensure that Bank operations adhere to the institution's operational policies and procedures. A Request for Inspection may be filed by any group of individuals who believe that their rights or interests have been tr may be directly and adversely affected by a Bank-supported project Any such group can request that the nspection Panel'investigates their complaints that the Bank failed to abide by its policies and procedures. in the iroject's design, appraisal, and/or implementaffon. Panel recommendations for an investfgation are subject to ipproval by the Wodd Bank's Board of Executive Directors. Since it began operations in September 1994, the lanel has received thirteen forrnal requests. For more informatfon on the Inspection Panel, please visit our website: http;v;vew.woddbank.org (search 'Inspecfon Panel:) or call the Wojid Bank Public Information Center (202) 458-5454 I N S P E C T I 0 N P A N E L R E S U L T S tiating more financial assistance with the Transitional Government of Ethiopia, despite the government's refusal to deal with the requesters' claim for compensation for a previous government's expropriation of their assets and blocking of their bank accounts. The request also alleged failures by IDA to disclose operational information. The Panel did not accept this request because the requester had not exhausted local remedies and had failed to establish how the lack of compensation was a consequence of any alleged acts or omissions of IDA. 3 Request Tanzania: Emergency Power IV Project (IDA Credit 2489-TA) Requesters A group of investors and workers Date filed May 1995 Project description To build an emergency power generation plant Claims of harm Preemption of private sector financing available on reasonable terms; excessive pollution from equipment to be financed by IDA Policies allegedly violated Article V Sections 1 (c), 1 (d), 1(g), IDA Articles of Agreement; OMS 2.36, OD 4.01 Inspection panel findings Management had followed IDA policies and procedures; requesters failed to prove direct pollution-related harm. Outcome Board approved Panel recommendation on a no-objection basis. Significance The independent Panel acknowledged IDA's compliance with its policies. Summary On June 16, 1995, a request was registered concerning the purchase and installation of an emergency power generation unit. The requesters claimed that there was no need for IDA financing of this equipment since private sector financing was available at reasonable terms (from the firm requesters owned or worked for). The Panel did not recommend an investigation because it found that management had considered the alternative financing and had adequately reported it to the Board prior to its approval of IDA's financing. The requesters also alleged violation of environmental policies. The Panel found that the requesters were not eligible to file such a claim since they could not possibly suffer any adverse effects from the alleged violation. R ° Fn FnrnrLm r nro r?nrmrnr n r.no m °,g-n[ D N S P E C T 0 O N P A N E L R E S U L T S 4 Request Brazil: Rondonia Natural Resources Management Project (PLANAFLORO) (IBRD Loan 3444-BR, 1992) Requesters Local NGOs representing intended beneficiaries of the project such as rubber tappers and indigenous peoples Date filed June 14, 1995 Project description To improve natural resources management and conservation in the Brazilian Amazonian state of Rond6nia; correct severe environmental damage resulting from large-scale inward migration during the 1970s and 1980s; establish zones to distinguish between areas capable of supporting sustained economic activity and areas requiring special protection because of ecological fragility or the presence of Amerindian indigenous peoples; establish health and other assistance programs for indigenous and other local populations Claims of harm Lack of project implementation, resulting in harm rather than benefit to the environment and to indigenous and other peoples' land, incomes, and health Policies allegedly violated OP 4.36; OP 11.02; OD 4.20, OD 10 70; OD 13.05; OD 13.40; OD 14.70; BP 10.00 Inspection Panel findings High level of deforestation and invasion of protected and reserved areas; evidence of fail- ure of the Bank to follow up on borrower's contractual obligations; lack of sustainable health programs Outcome Board rejected the initial Panel recommendation for an investigation and requested more information. Board did not agree to an investigation-as suggested again by the Panel on the basis of additional information-opting instead to review, with Panel assistance, progress on a plan of action agreed to between the borrower and the Bank. Subsequently, the Panel delivered to the Board a report on its findings on the execution of the project, which was accepted. Significance The requesters fully agreed with the project's objectives but complained about the Bank's responsibility in its design and the lack of execution of several of its main components. Summary The requesters complained that PLANAFLORO (intended to benefit fragile communities and the natural environments they depend on for their livelihood) had not been adequately implemented since the Board's approval three and a half years before. They claimed that the design of PLANAFLORO and the Bank's lack of enforcement of several project covenants resulted in the damage. Management response to the request, delivered to the Panel in July 1995, acknowledged and explained a number of the project's failures to comply with policies. The Board rejected the Panel's initial recommendation for an investigation, concluding it could not make a decision without more factual information. They asked the Panel for an Additional Review, which was submitted in December 1995 The Panel, having found suf- ficient preliminary evidence of harm linked to policy violations, again recommended an investigation. Later in December 1995 Management submitted a Status Report to the Board on the project implementation, which included a Plan of Action dealing with the principal issues listed by the Panel and included a plan to restructure the project. As a consequence, the I d S P E C T IIO N P A N E L R E S U L T S Board decided on January 25, 1996, that it was not advisable to proceed with the investi- gation. However, because of the project's complexity and the Bank's desire to help ensure its success, the Board decided to review Management's progress in six to nine months and to invite the Inspection Panel to assist in that review. The Board formally invited the Panel to conduct the review in January 1997. The Panel's report (issued to the Board in March 1997) found mixed results. Although prob- lems remained, locally affected people considered continuing the project preferable to end- ing Bank involvement. The Board accepted the Panel's findings in April 1997 and instructed Bank Management to report periodically on the execution of the project. On October 24, 1997, Management submitted a proposal to the Board to amend the legal documents for the project, which entailed substantial changes to the project design and the Action Plan. The historically high levels of deforestation in Rondonia mentioned in the Panel's reports have been confirmed by Amazon-wide studies carried out by the Brazilian government. The Bank and the borrower are still working toward establishing a sustainable health prol gram for indigenous people. 5 Request Chile: Pangue/Ralco Complex of Hydroelectric Dams Requesters Local NGOs representing the Pehuenche Indians and other Chileans living in the BioBio River basin. Date filed November 17,1995 Project description Construction of a hydroelectric dam and related transmission facilities. Claims of harm Alleged policy violations by the International Finance Corporation (IFC) in the financing of hydroelectric dams in the BioBio River in Chile Policies allegedly violated IFC Procedure for Environmental Review of IFC Projects (1990); IFC Environmental Analysis and Review of International Finance Corporation Projects (1993), WB OD 4.00, 4.20, 4.30, 13.05, OPN 11.02; 11.03 Inspection Panel findings The Request was found inadmissible because the IBRD/IDA Resolutions that established the Panel restrict its mandate to the review of alleged violations of operational policies and procedures of projects financed by IBRD and IDA. Outcome Panel made no recommendation. Significance First request for inspection related to a project financed by the International Finance Corporation Summary In November 1995 the Panel received this Request, which alleged that IFC's participation in the construction of the Pange/Ralco complex of hydroelectric dams in the BioBio River was in violation of a number of IFC and World Bank policies. The Panel informed the requesters and Executive Directors of IBRD, IDA, and IFC that the Request was inadmis- sible since the Resolutions that established the Panel restricts its mandate to the review of alleged violations of operational policies and procedures related to the design, approval, or implementation of projects financed by IBRD and IDA only. IIa S P E C T I O N P A N E L E S U L T S 6 Request Bangladesh: Jamuna Bridge Project (IDA Credit 2569-BD) Requesters Jamuna Char Integrated Development Project (local NGO representing Char dwellers) Date filed August 23, 1996 Project description To construct, operate, and maintain a bridge over the Jamuna River to connect the eastern and western parts of Bangladesh in order to stimulate economic growth; related resettle- ment and rehabilitation activities Claims of harm Dwellers on mid-channel islands in the river (chars) were left out of resettlement and rehabilitation plans Policies allegedly violated OD 4.00 and Annexes; OD 4.30; OD 14.70 Inspection Panel findings Char people were left out of initial resettlement programs, but subsequent development of a new compensation plan that included requesters made investigation unnecessary. Outcome Board requested Management to report on progress with the resettlement program in April 1998 Significance Highlighted inadequacy of the existing resettlement program, leading to a remedial Action Plan that included compensation to requesters Summary The requesters claimed that despite past and potential harm to their livelihoods and to the islands where they live and work as a result of the construction of the bridge and river train- ing works, they were not included in the project's resettlement and rehabilitation programs. IDA Management in its response of September 1996 denied any policy violations. The Panel found that the project's 1993 Resettlement Action Plan did not specifically identify or provide assistance for channel islanders as project-affected people, but that the Erosion and Flood Policy, issued on September 7,1996, after the request was filed, could constitute an adequate and enforceable basis for IDA to comply with its policies and meet the islanders' concerns. The Panel noted, however, that its success would depend on full and informed participation by the Char people In April 1997 the Board accepted the Panel's November 1996 recommendation that an investigation was not warranted at that time and asked IDA Management to submit a progress report in April 1998 on execu- tion of the resettlement program, including measures to compensate the Char people. This is an important case because, even though the Panel did not recommend an investiga- tion, the review process clearly showed that the Char people had not been included in the resettlement and rehabilitation plans of the project. As a result, IDA Management and the Borrower agreed to include them in future resettlement plans, and their concerns are being addressed. Moreover, the Board agreed to have the Panel comment on the progress report to be submitted by Management on the execution of resettlement measures, including compensation. I N S P E C T I O N P A N E L R E S U LT S 7 Request Argentina and Paraguay: Yacyreta Hydroelectric Project (several IBRD loans) Requesters SOBREVIVENCIA (Friends of the Earth), a local NGO representing residents of Encarnaci6n, Paraguay. Additional requests were later submitted by the residents of Posadas, Argentina. Date filed October 1,1996 Project description To construct a low-head hydroelectric facility, primarily an earth dam, to generate 3,500 megawatts of electricity and promote irrigation and mitigate the effects of flooding. Built in the main channel of the Parana River, the dam is to have a uniform height of 83 meters above sea level (masl). To achieve this goal, over 107,000 hectares of land- low-lying areas of Encarnaci6n, Paraguay, and Posadas, Argentina-must be flooded. Resettlement programs and environmental safeguards were a necessary part of the project. Claims of harm Harm to the environment and to the livelihoods of area people; adverse effects of involun- tary resettlement Policies allegedly violated OD 4.00 Annex B; OD 4.01; OD 4.20; OD 4.30, OD 11.70; OD 13.05; OPN 11.02; OPN 11.03, OMS 2.36 Inspection panel findings Noncompliance with resettlement and environmental policies; disparity between execution of civil and electromechanical works (almost complete) and resettlement and environ- mental actions (less than one-third complete). This disparity caused unnecessary and increasing friction between project authorities and affected populations, as well as environmental damage. Outcome Board rejected the Panel recommendation for an investigation but asked the Panel to review problems and assess proposed remedial Action Plans. The Panel's findings were mixed. Decision on further Panel involvement is still pending. Action Plans to resolve identified problems or implementation are under way. Significance Highlighted inadequacy of Bank follow-up of project execution, leading to Plans of Action agreed with the Borrower to correct existing resettlement and environmental problems Summary The requesters claimed that their standards of living and health and economic well-being had been, and might continue to be, directly and adversely affected as a result of both the filling of the Yacyreta Reservoir to 76 meters above sea level and the Bank's omissions and failures in preparation and implementation of the project. Management's response to the request in November 1996 denied policy violations and sought to challenge the validity of the request on several grounds. The Board requested that the Panel review content and initial implementation of such plans. This was the first request involving a project in the territory of two countries. The loans benefited a binational entity created for the prolect. The Panel found that after more than 15 years of construction and a total investment (including interest) of over $8.5 billion, the project remains riddled with problems. The most critical problem is the imbalance between the civil and electromechanical works, which are almost complete, and resettlement and environmental actions, which are likely to take several years to complete. (POW0000 0P8M1KWy0gSiPNM a 0g@COMlSit0@& I N S P E C T I O N P A N E L R E S U L T S The request was triggered by the filling of the reservoir to 76 meters above sea level prior to completion of agreed environmental and resettlement measures, which resulted in negative environmental impacts and placed the population in low-lying areas on both sides of the reservoir at a higher risk for a prolonged period. Latrines and wells of people living between 76 and 78 meters above sea level became useless because of the rise in the water table and created a health threat. If the project is completed to the design level of 83 meters above sea level, it would flood more than 100,000 hectares and affect the low-lying areas of two major cities: Encarnaci6n, Paraguay, and Posadas, Argentina. In February 1997 the Board rejected the Panel's December 1996 recommendation for an investigation. Instead, it authorized a review of problems and an assessment of agreed plans of action developed to remedy the effects of filling the reservoir prior to completion of environmental mitigation measures. During a May 1997 visit to Posadas, Argentina the Panel received additional requests for inspection from several groups of allegedly adversely affected people and from local com- munity leaders. The issues raised were the same as those in the Paraguayan request. In consultation with the Board the Panel decided to include the new requests in the same process. In its response Bank Management again denied the existence of policy violations. In December 1997 the Board considered, without any conclusion, the Panel's September 1997 report on the review and assessment of the Action Plans. The Board decided to postpone any decision on future Panel involvement until a second review of the role of the Inspection Panel is completed. An identical Request for Inspection was filed with the inspection mechanism of the Inter- American Development Bank. The findings of that Panel and the decision of the IDB's board of executive directors were similar to the World Bank's. The Panel process led to the formulation and financing of Action Plans to solve the prob- lems. However, the executing agency had fallen behind the execution schedule when the Panel issued its report. 8 Request Bangladesh: Jute Sector Adjustment Credit (IDA Credit 2567-BD) Requesters Private sector jute mill shareholders and CEOs-intended beneficiaries of the program Date filed November 25, 1996 Project description To support the restructuring and privatizing of the jute sector Claims of harm Flaws in design and delayed adjustment program implementation caused operational and financial problems to private sector jute mills, which were harmed rather than helped. Policies allegedly violated OD 8.60; OD 13.05; OD 13.40 Inspection Panel findings Inadequacies in program design; investigation not required Outcome Board concurred. IDA Management later closed the credit by not extending its closing date. I N S P E C T IIO N P A N E L R E S U LT S Significance First request relating to harm from a sector adjustment program; confirmed that sector or structural adjustment loans may be subject to Requests for Inspection. Summary The request claimed that the shareholders and management of private jute mills felt directly and materially affected by the policies supported by the credit This was the first time that the Panel had to address harm of this nature. IDA Management in its response to the request in December 1996 claimed that the credit had been "designed, appraised, and implemented in full accordance with IDA policies and procedures," adding that delays in program implementation were the responsibility of the Borrower and, as such, "are outside the jurisdiction of the Inspection Panel, which is not authorized to deal with complaints with respect to actions which are the responsibility of other parties, and not of IDA." The Panel, after requesting a legal opinion from IDA's General Counsel, concluded that the request met all eligibility criteria required under the Resolution, that requesters appeared to have suffered adverse material effects during partial implementation of the reform pro- gram supported by the credit, and that it was not satisfied that Management had complied with all of IDA's policies during the design and implementation of the credit. The Panel pointed out that extension of the availability of credit funds should be based on a reevalu- ation with the Government and the requesters of the credit's basic design and content of the policies it supported The Panel nonetheless cautioned that such a measure could still not be an adequate remedy for the harm alleged by the requesters. The.Panel stated that under the circumstances however, further review of the issues through a formal investiga- tion would serve no useful purpose. 9 Request Brazil: Itaparica Resettlement and Irrigation Project (IBRD Loan 2883-1-BR) Requesters Over 120 individuals and the P61o Sindical do Submedio Sao Francisco (local NGO) Date filed March 19, 1997 Project description To provide assistance to people relocated as a result of construction of the Itaparica Hydroelectric dam (not financed by the Bank) on the Sao Francisco River, including provi- sion of social infrastructure and irrigation schemes Claims of harm Health, standards of living, and economic well-being suffered rather than benefited from the project Policies allegedly violated OD 4.00 Annex B; OD 4.01; OD 4.20. OD 4.30; OD 13 05 Inspection Panel findings Failures in project design and Bank follow-up of project execution; investigation recommended Outcome The Board did not authorize an investigation. The Panel was invited to assist in the progress review of a remedial plan in September 1998 Significance First Bank-financed stand-alone resettlement project Summary On March 19, 1997 the Panel received a request from more than 120 individuals and the P61o Sindical do Submedio Sao Francisco-a local organization representing people living I N S P E C T I O N PA N E L R E S U LT S in the project area. Dating back to 1987, this was the first Bank-financed stand-alone resettlement project to benefit people affected by the construction of the Itaparica Hydroelectric dam and reservoir, located on the Sao Francisco River at the border of the states of Bahia and Pernambuco. Construction of the dam was not financed by the Bank. The requesters claimed that their standards of living, health, and economic well-being had suffered rather than improved as a result of Bank omissions and failures in project prepa- ration and faulty execution. The Management Response in April 1997 denied violations of policies. On June 24, 1997, the Panel recommended an investigation. On September 9,1997, the Board rejected the Panel's recommendation. But given the government's Action Plan for completing the project, which included its own funding of about $290 million, and its request for continued Bank supervision for two more years, the Board decided to review progress on the Action Plan in 12 months, with the Panel's assistance. In February 1998 representatives from P61o Sindical, at a seminar with the Board, com- plained that they were not consulted in preparing remedial measures and that Brazilian authorities had not informed them about the existence of an Action Plan. They also claimed that the funds allocated for the project were less than would be required for main- tenance of existing project facilities. The Itaparica project was the second highest cost-per-family resettlement project in the Bank's history. Even though almost all funds from the loan had been disbursed, only about one-third of families had been resettled. 10 Request India: NTPC Power Generation Project in Singrauli (IBRD Loan 3632-IN) Requesters Group of residents in the project area Date filed May 2,1997 Project description To improve the commercial and environmental performance of NTPC power stations and improve resettlement and rehabilitation management. To increase the capacity of both the Rihand and Vindhyachal thermal power plants by 1,000 megawatts, 300 hectares of land was to be acquired for expanding the existing ash dikes used for disposing of the fly ash produced. Claims of harm Harm from involuntary resettlement and adverse environmental impacts Policies allegedly violated OD 4.01; OD 4.20; OD 4.30; OD 10.04; OD 13.05 Inspection Panel findings Limited investigation findings show serious violations by the Bank of policy and procedures on resettlement and rehabilitation, participation, and consultation with local people. Pressure to process the loan contributed to policy violations and implementation problems, as did the Bank's inadequate ability to supervise and assist in capacity building. Outcome The borrower and Bank agreed to Action Plans to improve the situation on the ground. A local independent panel and consultants were appointed. Reports are pending from an independent fact-finding team and an independent monitoring team. 109) r.) mi. qi ( n - A flr Mf 1 A rn fArq -nPn n, Pn m r n n, r?ArS hlpni n no rn 0 A rn rinfl I S P E C T I O N P A N E L R E S U L T S Significance Management acknowledged that the project was only in "partial" or "substantial" compli- ance with some policies. For the first time the Panel's investigation was restricted to a "desk study" at Headquarters Summary On May 2, 1997, the Panel accepted a request from residents of Singrauli, who claimed that people living in the project area have been, and may continue to be, harmed as a result of the Bank's policy violations in the preparation and implementation of the project. Management acknowledged some policy violations in its response of June 3,1997. In July 1997 the Panel recommended an investigation. In September 1997 the Board- after considering a remedial Action Plan presented by Management on September 2, 1997-approved an investigation restricted to a desk study in Washington, D.C. The Panel submitted its report to the Board in December 1997. The Action Plan included the appointment of two independent teams. One was a team charged with, among other tasks, fact-finding and verifying the validity of specific claims The second was an independent monitoring panel of distinguished Indian nationals, including candidates proposed by NGOs, appointed to investigate allegations of forceful evictions and harassment of affected families The Panel found that although the Bank loan processing complied with formal procedural requirements, some actions led to the present problems: pressure to process the loan before the closing of the fiscal year, accompanied by a lack of capacity on the part of the Bank to supervise and its misjudgment of the Borrower's capacity to implement appro- priate environmental and resettlement actions. One of the Panel's findings was that there was inadequate analysis of alternatives to the disposal of ash in dikes, such as back-filling of mines. This led to the need for rural land, resulting in involuntary resettlement. There have been numerous reports of continuing violations of Bank policies even after the independent monitoring panel visited Singrauli in late December 1997. The Panel, however, has not been able to verify the situation on the ground. A Board decision on the Panel's investigation request is still pending. I N S P E C T IIO N P A W E L R E S U LT S 11 Request India: Ecodevelopment (IBRD Loan 2916-IN) (GEF Trust Fund Grant TF028479) Requesters A local NGO representing the inhabitants of Rajive Gandhi National Park, Nagarahole, Karnataka State, India Date filed April 3, 1998 Project description To conserve biodiversity in seven globally significant protected areas by using eco- development measures including improved management and the reduction of negative impacts of local people on protected areas, to establish programs of assistance to local people by conducting environmental education, impact monitoring, and other measures, as needed. Claims of harm Ignores tribal population in the core areas of the Nagarahole National Park, where there are 58 tribal settlements with a population of about 6,145, resulting in lack of specific indigenous people development plans designed with the informed participation of affected groups of indigenous tribal people and NGOs involved in their development. The Requesters also fear the forceful eviction of the tribal populations from the project area Policies allegedly violated ODs 4.20, 4.30 and OP 4.36 Inspection Panel findings Pending Outcome Pending Significance First request related to a project with Global Environment Facility cofinancing. Summary This request is currently being reviewed by the Panel. 1Rl r we i«nn npoi w -rn 1fflifKF n mrnm -ux no Hfi nRRm Ai I N S P E C T I 0 N PA N E L R E S U LT S 12 Request South Africa: Lesotho Water Highlands Project Phase 1 B Requesters A group of residents living in Gauteng province in South Africa Date filed April, 1998 Project description To build in Lesotho a dam at Mohole, a weir at Matsoku, and water tunnels from each site to channel water to the Datse dam to supply water to Gauteng province in South Africa and related waterworks. Claims of harm Alternative economic analysis of the optimum starting date has not incorporated demand- side management studies; this lack of demand-side management studies showing a need for expansion, low-income water users will not be able to afford the higher cost of water; cost of debt servicing of the water supply at this time means that will squeeze out other projects to provide water to poor communities or to make badly needed repairs to the existing water supply infrastructure for such communities Policies allegedly violated ODs 4.00 and 4.15, OPs 4.07 and 10.04 Inspection panel findings Management response pending Outcome Pending Significance First request related to a project of the Bank's Africa Region. Summary This request is currently being reviewed by the Panel. I N S P E C T I O N PA d E L R E S U LT S ~~ ~~~ii o ~~~Texts of Requests forlInspection, Bank T e~s e oomP is management responses, Panel recoin- 0'fl f0 1 ffIJlj (0) g m'J |mendations on requests, executive directors' decisions, and Panel investi- Panel members World Bank Ineoshop gation reports and Bank management Alvaro Umafia Quesada, Chairman 701 18th Street, NW responses. Ernst-Gunther Broder Washington, D.C. 20433 o Press releases. Jim MacNeill Telephone 202-473-2941 Facsimile: 202-477-0604 On the jnternet Secretariat o Provides information on the Panel's Eduardo G. Abbott, Executive Secretary World Bank Pulblic GnDiormalion creation, purposes, and procedures, Antonia M Macedo, Assistant Executive Centers many from the Operating Procedures, Secretary (London, Paris, and Tokyo) which also includes the text of the o Operating Procedures, August 1994, resolution establishing the Panel. Address includes resolution establishing the o Promptly displays each step in the 1818 H Street, NW Panel (English, French, Portuguese, processing of requests. The same Washington, D.C. 20433 Spanish). information is available in a register Tel. 202-458-5200, Fax 202-522-0916 o The Inspection Panel Report, August 1, at the Panel's office. Email address- lPANEL@IWorldBank.org 1994 to July 31, 1996, Stock No Web site address: Interet. http.//wwwworldbankorg/ 13821. http://www.worldbank.org/ o Annual Report 1997, Stock No 134063. Reque$M fW 0nspecftn (sugge$Med bvrmaR) To THE INSPECTION PANEL, 1818 H St., NW, Washington, D.C. 20433, USA (or to a World Bank field office) We [the requesters] and other persons whose names and addresses are attached live/represent others who live in the area known as [provide name of area] present this request for inspection 1. We have suffered harm or are likely to do so as a result of failures or omissions in the design, appraisal, or implementation by the Bank of [add name or brief description] project. (a) List of failures or omissions that we believe are the Bank's responsibility. (b) Description of the damage or harm resulting from the failures and omissions (c) List or description of the Bank policies and procedures we believe have not been observed [if known]. 2. Our complaint has been raised with Bank staff by [describe and attach correspondence if possible]: (a) There has been no response. (b) We are not satisfied that the Bank's response fully addresses our problems. 3. In addition, we have taken the following steps (if any) to resolve our problem. We request that the Panel recommend the Bank's executive directors that an investigation of these matters be carried out to resolve the problem. As advised in your Operating Procedures, this Request for Inspection is brief. We can provide you with more particulars. SIGNATURES Date CONTACT ADDRESS Attachments: yes O no OL We authorize you to make this request public: yes L no lJ gafflOo O [®i7