The case, which now goes back to a US district court, relates to alleged pollution caused by a Gujarat-based power plant partly funded by IFC.
On February 27, the US Supreme Court ruled in favour of a group of fishermen and a Gujarat village panchayat in a suit against the US-headquartered International Finance Corporation (IFC). The case, which now goes back to a US district court, relates to alleged pollution caused by a Gujarat-based power plant partly funded by IFC.
The coal-fired power plant, near Mundra port in Gujarat’s Kutch district and with a capacity of 4,150 MW, is the country’s first to deploy energy-efficient supercritical technology (which results in energy efficiency 40.5% higher compared to other coal-based power technologies). Initially conceived by Power Finance Corporation Limited, it was awarded in 2007 to Coastal Gujarat Power Limited, a subsidiary of Tata Power. It reached full generation capacity in March 2013, and has since been selling power to utilities in Gujarat, Maharashtra, Haryana, Punjab and Rajasthan.
Of the estimated project cost of $4.14 billion, $450 million was funded in 2008 by IFC, which finances private-sector development projects in poor and developing countries. Asian Development Bank advanced $450 million as loan, Export Credit Agency of Korea extended another $800 million as a loan, and CGPL raised around Rs 1.5 billion from Indian banks through debt.
The plant is located near Tragadi village in Mandvi taluka, and Navinal village in neighbouring Mundra taluka. Tragadi has a colony of fishermen in an area known as Tragadi-Nal while Navinal is rich in agriculture and horticulture. Navinal sarpanch Gajendrasinh Jadeja says the village has a population of 3,100. Tagradi has 1,238, while activists estimate that 110 families (675 people) live in Tragadi-Nal and another 50 fishermen families operate boats from nearby Kotadi harbour.
In 2010, fishermen of Tragadi and residents of Navinal came together under the aegis of fishermen’s organisation Machimar Adhikhar Sangharsh Sanghathan (MASS) and complained to the company about damage to the environment.
According to National Fish Worker’s Forum, a nationwide federation of fishermen organisations, the plant operates a cooling technology that requires much more water than the system it got clearance for. The water is eventually discharged into the sea, and the complainants have alleged that it has affected marine life.
“The company had first got clearance for a closed-cycle cooling system in the Mundra plant. But it got government clearances modified and installed boilers with an open cooling system [which requires three times as much water] and then discharges water into the sea. We demanded that they switch to the closed-cycle cooling system, but the company refused,” said Forum secretary Usmangani Sherasiya.
MASS general secretary Bharat Patel said the outfall canal of the plant discharges hot and saline water at a rate of 600 million litres/hr. “It is affecting marine life as well as groundwater sources,” he said. Budha Jam, leader of the fishermen community of Tragadi-Nal, says: “With marine life near the coast affected, we are forced to sail farther in search of fish. They also dredged the coast and seafloor for their outfall channel and deposited sand near a well, which was a source of drinking water. Water in the well has turned saline since.” Complainants add that coal dust and fly-ash from the plant are damaging date palms and chikoo trees in Navinal.
In 2010, fishermen, farmers and the Navinal panchayat, with the help of Delhi-based NGO Centre for Financial Accountability, moved the Complaints Adviser Ombudsman, an accountability mechanism for IFC, as well as the compliance review panel of ADB. The ombudsman conducted an internal audit and submitted its report in 2012, and CRP submitted its report in 2015, but Patel of MASS said these did not change anything on the ground.
In US courts
In 2015, Jam, Patel and sarpanch Jadeja filed a suit, through EarthRights International, against IFC in the Federal District Court for the District of Columbia. They contended that the funding agency should be held responsible for air, land and water pollution caused by the plant. Arguing that the IFC internal audit had found environmental violations, they sought damages and injunctive relief. IFC claimed absolute immunity from such litigation under the US International Organisation Immunities Act (IOIA), 1945. The district court ruled in IFC’s favour. In 2017, the petitioners moved the Court of Appeals for the district, which upheld the verdict. The petitioners then moved the US Supreme Court.
In a 7:1 verdict, the Supreme Court reversed the Appeals Court judgment. It ruled IFC enjoys only “restrictive immunity” in activities abroad, and remanded the matter back to the lower court for adjudication on damages. “Petitioners argued that the IFC was entitled under the IOIA only to the limited or ‘restrictive’ immunity that foreign governments currently enjoy. We agree,” it said.
In response to an emailed questionnaire, Tata Power said there is “no truth in this allegation as the Company has not only complied to all the Environmental and Pollution norms of the Country but has also met the stringent recommendations of IFC and other Lenders so as to comply to International guidelines too”. It added that since its inception, CGPL has fully complied with all environmental and social norms and this has been endorsed by the Environment Ministry, Gujarat Pollution Control Board and other statutory and independent bodies. “The company has also got several internationally reputed third parties and experts to review the compliance aspects, who all have also found it fully in compliance & beyond. The Company is also conscious of the natural resources in the vicinity of the plant and has taken appropriate steps to not just preserve them, but to also improve the flora and fauna in and around the project area,” it said.
The article, first published in the Indian Express, can be accessed here.