The World Bank, it was reported exclusively in Business Recorder, has withdrawn its support for the Thar coal project, considered by successive Pakistani governments as critical to meeting the country's energy shortfall.
The Sindh government accused the World Bank of dual standards as it had already supported coal energy projects in South Africa, India and Botswana and the federal government for failing to take appropriate mitigating measures to forestall such concerns impacting on a project that Pakistan desperately needs to meet the ongoing crisis in its energy sector.
A World Bank-supported 30 million dollar technical assistance (TA) for Thar coal was approved in May 2009 and its identified objectives were: "to help the governments of Sindh and Pakistan strengthen the enabling policy, legal, and regulatory frameworks conducive to new investments in the coal-to-energy sector; and assist the governments to attract qualified private investors to develop Thar coal deposits and build new capacity for coal thermal power."
The World Bank categorised the project as Environment Category B, which it defines as a project that has potential adverse environmental impacts on human populations or an environmentally important areas - including wetlands, forests, grasslands, and other natural habitats - but which are less adverse than those of Category A projects.
In contrast, a Category A project ie Eskom Investment Support Project (South Africa) was approved by the World Bank this year. However, on April 6, 2010, the Inspection Panel received a request for inspection related to the project. The request was submitted by GroundWork and Earthlife Africa, two non-government organisations (NGOs) from South Africa, on behalf of representatives of the community members in the project area.
The Requesters, according to the World Bank website, stated that they are likely to suffer direct impact from the project and its associated facilities. After a response from the Bank staff, is received through its management, the Panel will determine whether the request for inspection meets the eligibility criteria and shall make a recommendation to the Executive Directors of the World Bank as to whether the matter should be investigated further or not, and subject to its findings, may also lead to the project's demise.
The World Bank also extended a loan to India, titled supported Coal-fired Generation Rehabilitation Project last year. However, this project envisages piloting a new approach to renovation and modernisation that moves beyond simple life-extension to making the rehabilitated plants more energy-efficient and environmentally sustainable.
This implies that the renovated plants will use less fuel (coal) and emit fewer greenhouse gases for every unit of electricity produced. In other words the project seeks to make an existing plant more environment-friendly, an objective in tune with the Bank's safeguard policies.
The Botswana coal project, category B project, the most similar to the Thar coal TA, envisages developing, owning and operating a 2100 MW coal-fired, supercritical power plant and an associated coal mine in eastern Botswana by a private sector project company.
In the case of the Thar coal project, the World Bank, reportedly, has clearly indicated two major concerns. First, environment concerns, as indicated by the projected loss of top soil in the event that Thar coal project is implemented, which would clearly impact on the livelihood of the farmers of the area.
Be that as it may, one would assume that these concerns are not the clincher as the project is accepted as environment category B. However, the second concern, namely the considerable trust-deficit of the local people with respect to the government, as noted by World Bank staff, is clear as villagers supported the idea of third party oversight with respect to resettlement and compensation issues. This is almost certainly the deciding factor in terms of the World Bank's reported withdrawal, especially when viewed in the context of the ongoing inspection for the South Africa project.
It is the responsibility of the federal government to deal with these issues relating to the concerns of not only the World Bank, but also of those who would have to be resettled if the project is implemented. Thus the Sindh government's claim that responsibility for the World Bank withdrawal from the project rests with the federal government as it failed to actively deal with the legitimate concerns of the Bank, as well as the area people, is reasonable. It is hoped that the federal government would take cognisance of this and speedily and effectively deal with the problem.