INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION FOURTH PROGRESS REPORT ON THE IMPLEMENTATION OF MANAGEMENT’S ACTION PLAN IN RESPONSE TO THE INSPECTION PANEL INVESTIGATION REPORT (INSP/89109-IN) ON THE INDIA VISHNUGAD PIPALKOTI HYDRO ELECTRIC PROJECT (LOAN NO. 8078-IN) NOVEMBER 25, 2018 ABBREVIATIONS AND ACRONYMS BP Bank Procedures GRC Grievance Redress Committee INR Indian Rupee OP Operational Policy PTCUL Power Transmission Corporation of Uttarakhand Limited RAP Resettlement Action Plan R&R Resettlement and Rehabilitation TBM Tunnel Boring Machine THDC THDC India Limited US$ United States Dollar VPHEP Vishnugad Pipalkoti Hydro Electric Project ii India INDIA VISHNUGAD PIPALKOTI HYDRO ELECTRIC PROJECT (LOAN NO. 8078-IN) Progress Report No. 4 Implementation of Management Action Plan CONTENTS Abbreviations and Acronyms ............................................................................................. ii I. Introduction ............................................................................................................. 1 II. Management Action Plan – Progress to Date ......................................................... 3 III. Additional Issues tracked under the Management Action Plan .............................. 6 IV. Next Steps ............................................................................................................... 8 iii India I. INTRODUCTION 1. This is the fourth Progress Report to the Board of Executive Directors (the Board) on the implementation of the Management Action Plan in response to the Inspection Panel Investigation Report No. 89109-IN on the India Vishnugad Pipalkoti Hydro Electric Project (VPHEP) (the Project). 2. On August 3, 2012, the Inspection Panel registered a Request for Inspection (the Request) concerning the VPHEP. The Request was submitted by residents of Chamoli district in the State of Uttarakhand (the Requesters). Management responded to the claims in the Request on October 24, 2012. In its Report to the Board, the Panel found the Request eligible and recommended that the Executive Directors authorize an investigation. On July 1, 2014, the Panel issued its report outlining the findings of its investigation, and this, along with Management’s Report and Recommendation, including the Action Plan, was discussed at the Board on September 30, 2014. A. PROJECT 3. The VPHEP has been designed as a 444 Megawatt, run-of-river hydropower scheme which, when completed, will generate an estimated 1,665 Gigawatt-hours (or million kilowatt- hours) of electricity in a typical year. This will represent a valuable addition of peaking power to India’s Northern Grid, which faces severe power shortages during periods of high consumption. The Project will also help reduce India’s greenhouse gas emissions by 1.6 million tons each year, compared to a thermal plant of the same capacity. 4. The Project infrastructure includes a 65-meter high diversion dam to create a small reservoir in the Alaknanda River. The river flows through a deep, uninhabited gorge at the dam site, so no fields, houses or any other major infrastructure will be submerged. The proposed reservoir will store 4.9 hours of average river flow in the lean flow season to allow the Project to meet its peaking generation obligations. A 13.4 km headrace tunnel will carry water to an underground powerhouse; all the diverted water will be returned to the river through a 3.07 km tailrace tunnel. To Management’s knowledge, the Project has one of the highest minimum flow standards in India; it will maintain a minimum flow of 15.65 m3/sec of water in the river at all times to sustain the aquatic health of the river. This is equivalent to approximately 45 percent of the average lean season flow of the river. 5. The objectives of the Project are: (a) to increase the supply of electricity to India’s national grid through the addition of renewable, low-carbon energy; and (b) strengthen the institutional capacity of THDC (Tehri Hydro Development Corporation, now THDC India Ltd.), the Project implementing agency, with respect to the preparation and implementation of economically, environmentally and socially sustainable hydropower projects. The Bank-funded components of the Project are: (i) construction of the VPHEP (US$638 million, Bank-funded portion); and (ii) technical assistance for capacity building and institutional strengthening at THDC (US$10 million, Bank-funded portion). 1 B. CURRENT STATUS OF PROJECT 6. The Project was approved by the Board of Executive Directors on June 30, 2011. Implementation of the Project has been subject to significant delays. An initial delay of almost two years in the award of the Project’s civil works contract was followed by a further 12-month delay due to the effects of significant flooding in 2013. As a result of these delays, and in response to a request for extension, the Bank has extended the Project Closing Date to June 30, 2019. About US$101 million has been disbursed to date. 7. Implementation progress continues to be moderately satisfactory, despite the poor performance of the civil works contractor for the Project. THDCIL continues to proactively work to improve implementation progress, with the support of the Bank team. Several key construction milestones were achieved over the past year, including diversion of the Alaknanda River, and commencement of erection of the critical tunnel boring machine. 8. Continued safeguard compliance remains an ongoing focus of the Bank team supervising the Project, for which the team has employed additional environmental and social safeguards consultants to increase the frequency of Bank safeguards monitoring. C. SUMMARY OF PANEL PROCESS, PANEL FINDINGS AND BOARD CONSIDERATION 9. The summary of key Panel findings is described in Table 1 below: Table 1. Key Panel Findings Item Finding Cumulative Impacts The Panel found that Management complied with the provisions of OP/BP 4.01 by, inter alia, ensuring the preparation of a cumulative impact assessment for the Project and by incorporating the recommended increased minimum environmental flow (e-flow) into the Project to mitigate cultural, religious and biodiversity impacts. The Panel noted that Project documents did not sufficiently address the proposed transmission line. Water Loss The Panel found that Management complied with OP/BP 4.01 by undertaking the baseline studies to document village water sources along the tunnel alignment routes and ensuring that THDC committed to provide alternative water sources in the event that an existing source was lost. However, the Panel found that the Bank did not identify detailed and adequate mitigation measures that could be operationalized if a water source were lost, in non-compliance with OP/BP 4.01. Risk relating to The Panel noted the steps taken to use Tunnel Boring Machine (TBM) technology to Structures, reduce potential harms from vibrations. The Panel found that this complied with Bank Landslides and Policy OP/BP 4.01 as a step to reduce or mitigate potential harm. The Panel found that, in Earthquakes compliance with OP/BP 4.37, Management took adequate measures to ensure the preparation of relevant studies by THDC during Project design, appraisal and implementation stages to mitigate the risks raised in the Request. The Panel noted the importance of Management clarifying the issue of slurry disposal. Risk to Aquatic Life The Panel found the Project in compliance with OP/BP 4.01 with respect to the and Ecology Requesters’ claim about the Project’s impacts on fish and aquatic fauna, but found that the analysis of the bedload issue was lacking and believed it may be necessary to study this issue further. 2 India Item Finding Resettlement and The Panel understood that resettlement and rehabilitation (R&R) efforts were underway Livelihood and almost half of the eligible families had already received their R&R assistance. Restoration However, with respect to Hatsari (where seventeen families were affected), the Panel found that the Project Resettlement Action Plan (RAP) did not adequately assess the Hatsari reality, in non-compliance with Bank Policy OP/BP 4.12 on Involuntary Resettlement. The Panel recognized, however, Management’s concern for the Hatsari issue and the fact that negotiations were continuing, with a wide range of options on offer to Hatsari residents. 1 Gender Impacts The Panel found that the THDC R&R Policy covering access to livelihood sources, i.e., fuel and fodder, complied with the requirements of OP/BP 4.01 and OP/BP 4.12. The Panel found that insufficient attention had been given to the issue of women’s security. A key issue will be regular monitoring of the labor camps with regard to women’s security, and of gender differentiated impacts of the Project. Local Benefit The Panel found that important efforts were being made to restore the livelihoods of Sharing displaced people in accordance with the provisions of OP/BP 4.12. The Panel noted that Management was responsive to OP 4.12, paragraph 13 (b), which requires that infrastructure and public services are provided as necessary to new resettlement sites and host communities to improve, restore, or maintain accessibility and levels of service for the displaced persons and host communities. The Panel also noted the need for clarity on the use of the royalty payments to the State and benefit sharing with Project affected villages. The Panel further noted the importance of assessing the impact of the Project on host communities at the end of RAP implementation. On the issue relating to community conflicts and the Grievance Redress Mechanism, the Panel found that the requirement of OP/BP 4.12 to establish an appropriate and accessible grievance mechanism had been met. In accordance with the requirement of OP/BP 4.12, the Panel noted the importance of the Project Grievance Redress Committee (GRC) being accessible to host communities so that their concerns can be heard and resolved when appropriate. II. MANAGEMENT ACTION PLAN – PROGRESS TO DATE 10. Management’s Action Plan addressed the two principal findings of non-compliance by the Panel by: (a) proposing to clarify in greater detail how alternative water sources would be supplied if required as part of the mitigation measures; and (b) ensuring a conclusion of the ongoing 1 Hatsari is one of the three hamlets comprising Haat village. During the Social Impact Assessment, Hatsari was included in the Project affected area as part of Haat revenue village. The village of Haat is affected due to underground power house, evacuation facility; approach road and surge shaft. Though initially only 17 households were affected, the community demanded for the relocation of the entire village given the disproportional impacts of construction likely to fall on them. Since the entire village was to be displaced, THDC offered a special package to Haat (including Hatsari) of INR one million over and above compensation and R&R assistance. However, Hatsari rejected the package. THDC put forward several enhanced relocation and compensation options, but these too were rejected by all eight Hatsari households (17 families). As a consequence, THDC changed the location of the switchyard, the alignment of the adit to the tail race tunnel, and the approach road to the surge shaft so that the Hatsari land would not be required for the Project. However, concerned about the impacts of construction nearby, THDCIL has consistently kept open the offer of resettlement (permanent or temporary) and is in continuing dialogue with the families of Hatsari. As a result of THDCIL’s efforts, eleven families have reached an agreement with THDC and six families are still negotiating for compensation package. 3 negotiations with the 17 families of the Hatsari hamlet that is compliant with Bank policy. Management also committed to continue to follow up on other issues raised by the Panel, and to ensure that the Project remained in compliance with Bank policies on these issues. 11. On the issue of water loss, the Panel’s findings have been addressed (baseline studies documented alternative water sources in 2014), and Project implementation continues to meet Bank safeguard requirements. 12. On the issues of Resettlement and Livelihood Restoration for the hamlet of Hatsari, THDC has made some progress this year in implementing the recommendations of the Action Plan with respect to the hamlet of Hatsari: • Of the 17 families in Hatsari hamlet, 11 had reached agreement on compensation packages identical to those of the broader Haat village, while the six remaining families (of which two are resident in Hatsari) continue to negotiate compensation packages with THDCIL; • Since the last Progress Report, the Bank engaged a community relations specialist to facilitate communications between the families and THDCIL. As a result, negotiations between the parties have resulted in the remaining families informally agreeing to lease their land to THDCIL for the duration of Project construction. Under the proposed agreement, the families will be provided with alternate accommodation for the duration of Project construction, and their land would be returned to the families in restored and developed condition, with new irrigation facilities, after the Project construction is complete. Other support, including construction of houses and rental allowance, is also included in the proposed agreement. • THDCIL has formally approved this proposed agreement with the remaining families of Hatsari, and is now taking steps to sign the agreement. The Bank team and the community relations specialist are supporting this process. The agreement will now be signed by the affected families and THDC, and formally witnessed by the District Administrator. 13. At the Bank’s suggestion, THDCIL also implemented several actions to improve relationships with Project Affected People. These include: (i) a community outreach program, which has now been underway for 18 months; and, (ii) engagement of a specialist firm to work with local communities to develop village-level economic development plans and expanded livelihood opportunities, including for Hatsari. Although procurement of this firm stalled over the past year, the specialist firm will now be selected by end-December 2018 and will commence work early in 2019. 14. Progress on these actions is described in more detail in Table 2 below. The Bank task team will continue to closely monitor the actions of THDC in respect of Management’s Action Plan. 4 India Issue Panel Findings Action/Status Risk to The Panel commended Management for THDC has initiated a site-specific bed-load movement Aquatic Life advising Project authorities of the need to study, which is expected to be completed before June and Ecology specifically study the issue of bed load, 2019. but found that the analysis was lacking A Catchment Area Treatment (CAT) Plan is under implementation to prevent sedimentation movement. An independent Consultant has also undertaken a Glacial Lake Outburst Flood Assessment. Gender The Panel found that insufficient THDC continues to take action in the following areas: Impacts attention had been given to the issue of Formation of SHGs: The Project has former self-help women’s security. A key issue will be groups (SHGs) to build skills that could help to regular monitoring of the labor camps augment existing incomes. These include three “all with regard to women’s security, and of women” SHGs with a total membership of 43 women, gender differentiated impacts of the and a mixed SHG with 16 members, half of whom are Project. women. Monthly Assistance Scheme for Widows Displaced by the Project: THDC has introduced a monthly assistance scheme for widows who were among those who had to relocate because of the Project. Assistance is being provided on an ongoing basis to identified recipients. Women Safety and Facilitation Centre: This center continues to function in the village of Haat, where it is managed by two residents of Haat village (one a woman). The center continues to monitor the activities of the labor force employed by the Civil Works Contractor. To date, the center has not received any complaints of harassment of women within the Project area. Cash assistance for fuel and fodder: To support local women (who are primarily engaged in collecting fuel and fodder for their families), the Project offered cash compensation for five years to mitigate the temporary loss of access to community forest or Van Panchayat land. To date the Project has disbursed INR 61.43 million to 1,724 households across 17 villages. As a result of THDC’s studies, the total number of households eligible for cash assistance has increased to 2521 from the 975 originally identified during preparation of RAP. Women’s security: Women guards continue to be employed at select sites to ensure the safety of local women. The GRC continues to constitute the required female membership and undertake training in gender issues. Female social mobilizers (including within THDC’s own social management unit) continue to interact with all affected villages on an ongoing basis. Local Benefit The Panel further noted the importance of While the RAP is still under implementation, THDC Sharing assessing the impact of the Project on has already undertaken a preliminary assessment of host communities at the end of RAP the impact of resettlement on local communities. implementation. 7 Issue Panel Findings Action/Status THDC management, its social management unit, and On the issue relating to community the Bank task team meet regularly with local conflicts and the Grievance Redress communities to ensure accessibility, and to Mechanism, the Panel found that the communicate Project benefits. requirement of OP/BP 4.12 to establish As part of its local benefit sharing, THDC has an appropriate and accessible grievance implemented community development activities under mechanism had been met. its corporate social responsibility program. These activities have been well planned with the involvement of local communities and are being regularly implemented. THDC has thus far invested INR 57.64 million in the activities, which include small infrastructure for villages; distribution of educational material and furniture in schools, and construction of additional classrooms. Meetings of the GRC take place at locations incorporating affected villages. The GRC continues to have two female members. The Project continues to maintain two Project Information Centers (PICs) – on of which also functions as a computer training center for Project- affected youth. IV. NEXT STEPS 16. Management will continue to monitor the implementation of the Management Action Plan. Management will also continue to support the ongoing negotiations between THDC and the village of Hatsari, and to the best of its ability, seek a satisfactory conclusion on the issue of compensation for resettlement and livelihood restoration. 17. Next progress report to the Board: The next progress report on the Management Action Plan will be submitted in 12 months’ time, or upon completion of the outstanding action, whichever occurs first. 8