Frequently Asked Questions: Coastal Gujarat Power Limited, Mundra

 Q. What is the Coastal Gujarat Power Limited (CGPL Mundra) project?

The Coastal Gujarat Power Limited (CGPL Mundra) project is a 4150-megawatt supercritical coal-fired power plant located near the port city of Mundra in India’s Gujarat state. This was the first supercritical thermal power plant of its size and is one of the most energy efficient coal-based power plants in the country.

CGPL, Mundra was developed as part of the Indian Government’s power sector strategy to address the country’s growing supply-demand gap.

The government-owned Power Finance Corporation led the initial conception of the project which was later awarded to Coastal Gujarat Power Limited (CGPL) in 2007.  CGPL was initially conceived as a 100% subsidiary of Power Finance Corporation. Post the bidding, the shares of CGPL were transferred to Tata Power Corporation Limited (Tata Power).

CGPL Mundra reached its full generation capacity in March 2013 and has been operating since. It has been selling power to utilities in 5 states – the western states of Gujarat and Maharashtra and the northern states of Haryana, Punjab, and Rajasthan – through a 25-year Power Purchase Agreement (PPA). The project has benefited 16 million rural and urban-based domestic consumers in those states and supplies cost-competitive power to the manufacturing and service industries.

 

Q. Why did India need a coal-fired power project?

In 2006-07, India was facing an enormous supply-demand gap - about a 10% energy shortage and a 14% peak power shortage. This gap was expected to grow rapidly given rising industrial activities and per capita consumption in the country. Therefore, there was an urgent need to significantly increase generation capacity in a short time to meet the rising demand and to sustain economic growth.

The key outcome of the Indian government’s assessment - captured in its Integrated Energy Policy in 2006 - was that coal would remain an important fuel with an estimated share of 51 percent.

 

Q. What is supercritical technology?

Supercritical technology requires less coal per hour than sub-critical technology to produce the same megawatt. This leads to lower greenhouse gas emissions, higher efficiency, and lower fuel costs per megawatt.

CGPL Mundra was designed to burn 1.7 million tons less coal per year, avoiding generation of about 764 grams of carbon dioxide per kilowatt hour. This was well below the Indian national average of 1,259 grams per kilowatt hour and the OECD countries’ average of 888 grams per kilowatt hour (figure as of 2005). As a result, the project was designed to avoid carbon emissions of 3.2 million tons per year.

 

Q. What is IFC’s role in CGPL Mundra?

IFC financed $450 million out of an estimated project cost of $4.14 billion in the form of a straight senior loan in 2008.

 

Q. What is the development impact of CGPL Mundra?

CGPL Mundra has added two percent to total generation capacity in India and provides power to 16 million people in five states. It also supplies cost-competitive power to manufacturing industries and services. The project created 5,000 jobs during construction and provides 700 jobs during operation. CGPL has a structured corporate social responsibility (CSR) program which contributes to socio-economic improvements in the communities residing in its vicinity. Details related to this program are provided in a third party report which has been publicly disclosed via the CGPL website at  https://www.tatapower.com/businesses/cgpl-mundra/csr.aspx.

 

Q. Was CGPL Mundra project consistent with the World Bank Group’s approach to the energy sector in 2008?

Yes. The World Bank Group’s Country Assistance Strategy (2005-2008) supported India’s 10th five-year plan, and aimed to strengthen the enabling environment for private sector led growth in infrastructure, after India’s Electricity Act of 2003 opened energy generation to the private sector.

The project was also a strategic fit with IFC’s climate change strategy of 2008 for the electricity sector, since it was based on supercritical coal technology for power generation. The use of supercritical technology results in higher energy efficiency of 40.5% compared to other coal power generation technologies being used in developed and developing countries (subcritical is at 35%). The project was designed to have amongst the lowest greenhouse gas emissions globally, which was expected to be lower by 40 percent and 16 percent compared to the average greenhouse gas emission rate of coal based power plants in India and OECD countries respectively.

 

Q. What is IFC’s approach to supporting energy sector development now?

IFC’s strategic objectives in India are to promote inclusive, strong, and sustainable growth by solving the country’s largest development gaps of inclusion, sustainability, infrastructure, and productivity.

IFC is focused on the expansion of renewable solutions, specifically through creating and strengthening commercial rooftop solar, off-grid, and other renewable energy businesses. IFC’s India Country Strategy for FY17-21, aims to support India’s goal of installing renewable capacity. As a key player in India’s renewable energy space since 2010, IFC has played a role in deepening energy penetration and provided over $1 billion in financing (including mobilization) to the renewable energy sector in India.

 

Q. What is the CGPL Mundra CAO Complaint about?

The first complaint against CGPL Mundra was filed in June 2011 (CGPL -01) with IFC’s Compliance Advisor Ombudsman (CAO) by four members of the Association for the Struggle for Fishworker’s Rights (MASS) – who represent the interests of fishing communities in the Project area.

The Complaint raised issues related to the project’s social and environmental impact on fishing communities, relating specifically to water quality and fish populations, access to fishing and drying sites, displacement of fishermen, air emissions and destruction of natural habitats. The complainants also believe these impacts were not adequately identified and mitigated, and the cumulative impact of the project was not adequately assessed.

The second complaint - filed in April 2016 (CGPL-02) by local residents of the Tragadi village - raised concerns about the outfall channel connected to the CGPL project and the impacts of the channel on the environment and local fishermen’s livelihoods.

Information regarding the Complaints can be found on the CAO website at (CGPL -01) and (CGPL-02).

 

Q. What is the Compliance Advisor Ombudsman (CAO)?

The Office of the Compliance Advisor Ombudsman (CAO) is the independent recourse mechanism for environmental and social concerns in projects supported by IFC and the Multilateral Investment Guarantee Agency (MIGA) and is based in Washington, D.C.

CAO was established in 1999 to assist in addressing complaints from people who believe they have been affected by IFC/MIGA supported projects, enhance the environmental and social (E&S) outcomes of IFC/MIGA projects and foster greater public accountability of IFC/MIGA.

CAO seeks to find mutually acceptable solutions to complaints between IFC clients and project-affected communities using a voluntary, problem-solving approach.

CAO’s compliance reviews focus on IFC’s performance and whether E&S outcomes are consistent with the desired effect of IFC’s Environmental and Social Performance Standards provisions.

For more information, please visit CAO’s website.

 

Q. What is the status of the CAO Complaints?

The first complaint (CGPL -01) was deemed eligible by CAO for assessment in June 2011. After a series of meetings with the complainants and CGPL to explore the feasibility of CAO-facilitated dispute resolution, the Complaint was transferred to the Compliance team in February 2012 at the request of the complainants.

CAO concluded its appraisal in July 2012, and determined that a compliance audit was warranted. The Audit was completed and, together with IFC Management Response, was disclosed in October 2013.

In November 2013, IFC provided CAO with an Action Plan ( M&M plan- Management and Monitoring plan)  to address the issues found in the Audit. The implementation of the Action Plan is currently being monitored by the CAO.

CAO found the second Complaint (CGPL-02) eligible and in May 2016 initiated an assessment. The complainants did not agree to participate in a CAO-facilitated dispute resolution process, so the Complaint was transferred to the CAO Compliance team.

CAO’s compliance appraisal, published in September 2017, noted that the CGPL-02 complaint raises similar questions about IFC’s application of its environmental and social requirements to the project. As CAO’s ongoing compliance monitoring process of IFC’s response to the CGPL-01 audit addresses substantially similar compliance issues, CAO decided to merge the two cases for ongoing monitoring.

Relevant documents can be found on the CAO website at (CGPL -01) and (CGPL-02).

 

Q. What were the CAO’s Audit findings?

While acknowledging much of the diligent work done by IFC and CGPL in relation to the environmental and social aspects of what is a large and complex project, the CAO compliance audit determined several gaps in IFC’s appraisal and supervision of the project.

The Audit documents can be found on the CAO website.

 

Q. How is IFC addressing the CAO Audit findings?

On November 25, 2013, IFC provided CAO with an Action Plan in relation to this audit.

The Action Plan included commissioning a framework of independent studies to further investigate the issues and concerns raised in the complaint and findings of the CAO audit. Based on the findings of the studies, CGPL is expected to develop and implement appropriate remedial measures in consultation with domain experts, where adverse impacts were identified. CGPL has completed the studies indicated in the action plan (Monitoring and Management Plan) and the status of action plan implementation is publicly disclosed via CGPL’s website (https://www.tatapower.com/businesses/cgpl-mundra/csr.aspx).

IFC is working closely with CGPL on implementation of the Action Plan. Status reports on the Action Plan can be found here:

 

The project related key assessment documents can be found here:

Implementation of the Action Plan is being monitored by the CAO. Relevant documents can be found on the CAO website.

 

Q. What else is CGPL Mundra doing to help the fishing and other neighboring communities?

CGPL is involved in a wide variety of community development projects in and around the project site. As part of its CSR strategy, the company focuses on the entire Mundra and Mandvi block and the neighboring communities including fishing communities. Some of its activities are also focused on the broader Kutch district.

CGPL’s community outreach initiatives focus on improving education and healthcare, increasing access to safe drinking water and energy, natural resource management, and infrastructure improvement. The initiatives also focus on improving income generation and livelihood opportunities, empowering women, enabling access to government development schemes, and strengthening community based institutions.

Residents of 21 villages in the Mundra and Mandvi blocks of Kutch district of Gujarat state benefit from the project’s community outreach initiatives. Some programs focused on biodiversity, education and animal husbandry are implemented at a broader level covering the Kutch district.

Details of CGPL’s community outreach work can be found here: