A new official report has found that villagers in Jharkhand have suffered harm to their livelihoods as a result of a World Bank-backed coal mining project. The report by the Bank's Inspection Panel concludes that Bank staff violated many of the Bank's own policies, including those on resettlement, indigenous peoples, environmental assessment and project supervision.

The report vindicates the allegations made for many years by Chotanagpur Adivasi Sewa Samiti (CASS), a local NGO. CASS complained about two inter-related loans, one aiming to allow Coal India to expand open-cast coal mining whilst the other aimed to improve its ability to conduct social and environmental planning and mitigation. The Inspection Panel report was submitted to Bank senior management in early December and will be discussed by them in February. It finds that there were a number of problems with Coal India's resettlement policy in general and in the East Parej mine which was subject of the claim.

The Panel argues that "management's failure to ensure that the original Resettlement Action Plan (RAP) reflected reality on the ground resulted in many problems. Many of the displaced Project-affected persons (PAPs) have not been and are not being compensated at full replacement cost, with the result that many have suffered and continue to suffer harm". The Panel finds that this results from a failure to be transparent in how existing land and housing was measured, realistically value the existing land and housing, offer a choice of resettlement sites, provide jobs or effective income generation schemes.

A local Public Information Center was established in one of Coal India's offices, but documents can only be consulted when Coal India staff are present.
Apart from initial baseline interviews, the Panel found that "there is nothing to indicate that the people in Parej East were 'systematically informed and consulted during preparation of the resettlement plan about their options and rights'" (as is called for in the Bank's Involuntary Resettlement policy). The Panel found "no evidence" that documents such as the Sectoral Environmental Impact Assessment were available to local NGOs for their review. The Bank claimed that the project mid-term review report could not be released unless authorised by Coal India.

A local Public Information Center was established in one of Coal India's offices, but documents can only be consulted when Coal India staff are present. "Despite the low levels of literacy among PAPs, all information in the Center is in technical written documents. The Panel was surprised to see no pamphlets, or simplified informational materials, or sketches, photographs or visual materials to depict the Project, its sequence and effect on people. For poor, vulnerable and now dependent people, it is clearly intimidating to approach an office in that location, let alone walk in and freely request information, register complaints and engage in dialogue".

Although this project was one of the most supervised World Bank projects ever (with 21 missions between 1996 and 2001) the Panel found that: "the supervision team's knowledge of ground realities was limited, and for that reason, their efforts to resolve problems had virtually no impact on the ground". Some of the planning for this project was also not at all grounded in fact.

For example the Environmental Management Plan for the Parej East mine suggested that only about half of the 253 hectare mine area would be reclaimed for agricultural land after mining, while the rest would be left to fill up with water. This water, it was argued, "will help the local population, as a source for irrigation, drinking or industrial demand". The Panel concluded, however, that the water would be inaccessible, as it would be "tens of meters below the surrounding countryside and separated from it by vertical quarry rock faces". It would be very costly to pump it for irrigation, and impossible to use for drinking as it would be poisoned by contact with coal seams.

The Panel recommends that the Bank make good its promise to continue monitoring the social issues after the project closes. It also suggests establishing an Independent Monitoring Committee as was done for the Singrauli National Thermal Power Corporation loan. Panel recommendations are not binding, however. Because of this, CASS has drawn up its own Action Plan which it wants the Bank Board to support but allow to be implemented independently of the Bank. The Plan sets out ways to address the livelihood restoration of the project affected people, for example through granting secure title to sufficient land, and also through job opportunities.

Many of the Panel's findings are uncomfortably similar to the conclusions of previous Bank reports - for example the independent review of the Sardar Sarovar project (1992) and the Bank-wide resettlement review (1994). NGOs had lobbied against the approval of the projects in 1995 and 1996, warning that the projects were being "done without the PAPs' consent, are usurping their resources and transferring their wealth to the mainstream economy". CASS claim that the Bank "oversold" the project, "appearing to exaggerate its value so that it would be approved by the Board" and mining could go ahead.

The response of Bank Management and the Bank's Board is expected in late February.