Independent Observer to World Bank regarding Allain Duhangan Project

IFC Support for the Proposed Allain Duhangan Project in India

Dear Mr. Wolfensohn,

In March 2004 the International Finance Corporation and a group of Indian NGOs had asked me to facilitate the public hearings to review and discuss the potential environmental and social impacts, and the proposals for mitigating those impacts, for the 192 MW Allain Duhangan (Hydropower) Project in Himachal Pradesh, India. The IFC was considering approving financial support for this project.

Following the review of the documents made available to me (and the team set up for the purpose), and the meetings held in the affected villages, in March and May 2004, our report was submitted to the IFC by the end of May 2004.

Some of the important outstanding issues mentioned in our report (copy enclosed) included:

• The Environmental and Social Impact Assessment (ESIA) of the project is incomplete in many respects and needs to be completed. Specifically, the base line studies of the social Impacts survey for all the project components and also that of the flora, fauna and riverine biodiversity across a year are yet to be done. All these need to be completed and there should, then, be another public hearing. (page 15–16, recommendations 7, 10 to15).
• The project does not have the required "No Objection Certificate" from Jagatsukh Gramsabha (Village assembly) (page 11, point 2).
• Institutional mechanisms for grievance redressal and for interaction with the local communities need to be created (page 14, recommendations 1 to 6).
• The apprehensions among the people regarding inadequate flows in the Duhangan river downstream of the diversion point, impact of the project on livelihoods of the communities in the project area (due to impact on apple cultivation, impact on tourism, impact on grazing lands and forests) and compensation thereof, need to be addressed (page 15, recommendations 7 to 9; annex 10, page 68 to 83).

I stand by our report, its findings and recommendations.

I am writing to you because some of the concerned NGOs inform me that the IFC is now again considering approving support for this project. They also inform me that many of the recommendations that we made have not yet been implemented.

Though not being in a position to independently verify the status of compliance with our recommendations, one cannot but take seriously the information being sent by the NGOs.

Therefore, I would strongly urge you to first credibly verify compliance with the recommendations before you consider the project for clearance. This verification should be done in a participatory manner, involving the affected local communities. If our recommendations, which as far as we know were all accepted, are not going to be taken seriously prior to the clearance of the project, there is little chance that they will be respected after the project is cleared. And the non–implementation of these and other recommendations would not only result in the project becoming socially and environmentally non–viable, but also heighten the already existing social tensions.

Yours Sincerely,

Shekhar Singh