Ex-Im Bank Inspector General Investigating Financing of 4,000 MW Coal Project in India

U.S. Export Import Bank Photo Credit Andrew Harrer Bloomberg

The Inspector General of the U.S. Export Import Bank is investigating the bank's financing of a 4,000 megawatt coal-fired power plant that environmentalists say is associated with “catastrophic” human rights, labor and environmental violations.

Reliance Power Ltd.'s Sasan coal-fired power plant and attached mine in Singrauli, India, which received $650 million in Ex-Im financing, is being examined to make sure of the bank's “compliance with law and policy, including the bank's social and environmental policies,” Michael T. McCarthy, the bank's acting inspector general, said in an Oct. 20 e-mail to Bloomberg BNA.

The project has been associated with violence, the abduction of local residents and the demolition of houses “in the middle of the night while families were still living in them,” according to the report “The U.S. Export-Import Bank's Dirty Dollars,” which was released Oct. 20 by the Sierra Club, 350.org and other groups that visited the site while conducting an independent investigation.

Contaminated Drinking Water.

The report also said that displaced residents weren't compensated, “resettlement colonies” lacked amenities such as water pumps and that coal ash ponds from the plant are contaminating local drinking water supplies.

Reliance Power, a Navi Mumbai, India-based utility that reported revenue of 51.7 billion rupees ($845.0 million) for the year ending June 30, didn't respond to a request for comment.

The bank, which provides financing to expand U.S. trade, finalized the funding for the project in 2010 as part of a deal in which exports from mining and equipment manufacturer Bucyrus International Inc. and other U.S. companies would be used, creating 1,000 American jobs.

Caterpillar Inc., which acquired Bucyrus in 2011, didn't return a request for comment.

The environmental groups that authored the report, which also include Friends of the Earth and Pacific Environment, said they began their own investigation, including two trips to the plant in Madhya Pradesh, after Indian-based organizations and affected communities reached out to them.

'Deaf Ear.'

“Indian civil society organizations and U.S.-based groups have repeatedly alerted Ex-Im to the grave human rights violations taking place at Sasan, but the bank has continually turned a deaf ear,” Nicole Ghio, a campaign representative of Sierra Club's international climate program and one of the report's authors, said in a statement. “These are the stories Ex-Im and the [Office of Inspector General] attempted to mute.”

McCarthy, the bank's acting inspector general, said the report was “not accurate” but didn't elaborate, citing the ongoing investigation.

In a statement, the Ex-Im Bank said it has ordered independent reports on the allegations and is conducting “periodic monitoring” of the project, noting that staff have traveled to the project site several times.

The Export-Import Bank is aware of, and takes very seriously, the allegations that have been raised concerning the Sasan project site and continues to investigate their origins, as well as how the company is addressing them,” the bank said in a statement.

Environmental, Social Guidelines.

"While it is the mission of the Ex-Im Bank to finance the sales of American products overseas in order to create jobs here at home, all transactions are subject to the bank's stringent and transparent environmental and social impact guidelines,” the statement said.

The Ex-Im Bank has failed to make documents available, such as the project environmental and social management plans as well as supplemental environmental reports, “despite legislative and agency policy requirements that it do so,” according to the report.

The bank's review of large foreign coal projects came under congressional scrutiny earlier last summer, as part of an ongoing fight over whether the bank's charter should be continued.

Ultimately, the continuing resolution (H.J. Res. 124) passed into law in September that extended the bank's charter through June 30, 2015, continued a policy rider backed by Rep. Hal Rogers (R-Ky.) that overrides Obama administration guidance limiting the Export-Import Bank from financing overseas coal-fired power projects.

$1.5 Billion For Coal.

In total, the bank has authorized $1.5 billion in financing for two coal projects, including $805.6 million in financing in 2011 for Overland Park, Kan.-based Black & Veatch Corp. to construct one the world's largest power plants, the 4,800 megawatt Kulsie project in South Africa being developed by Eskom Holdings Ltd.

They're not only terrible for the global climate, but they are also local environmental debacles with impacts that are quite disastrous for human rights in these communities,” Doug Norlen, senior manager of Friends of the Earth's economic policy program, said in an interview.


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