Skip to main content

Beijing-based infrastructure bank 'funding' India's environmentally risky projects

By Our Representative
A new civil society note has questioned the operations of the Beijing-based Asian Infrastructure Investment Bank (AIIB), a multilateral development bank that aims to support the building of infrastructure in the Asia-Pacific region, seeking to fund projects in India through the Government of India’s National Infrastructure Investment Fund (NIIF), calling it “a risky venture”.
The “briefing note” on the involvement NIIF with AIIB says that the relationship between is riddled with “lack of information” on environment and social impact assessment on any of the projects that are sought to be funded in India. An expanding multilateral institution, AIIB has under its fold 70, and another 27 in the waiting in the wings. Already, it is being seen as “a potential rival” to the World Bank and the International Monetary Fund (IMF).
Pointing towards how what havoc such lack of transparency can create, the briefing note, authored by Anuradha Munshi and Kate Geary for the Centre for Financial Accountability and Bank Information Centre (BIC), Europe, respectively, gives the example of GMR Kamalanga, a coal-based power plant project, proposed in Kamalanga village of Odisha, which the World Bank’s private lending arm, Infrastructure Finance Corporation (IFC) had decided to fund.
Calling GMR Kamalanga a “disastrous project”, the briefing note points to how local project-affected communities with the support of two NGOs had to complain with IFC ombudsman saying that the project posed a threat to their health, livelihoods and human rights. In its investigation, the ombudsman found that IFC “had breached its standards”, especially IFC’s “pre-investment environment and social due diligence.”
Pointing out that the first phase of AIIB’s investment through NIIF was approved in June 2018, and yet, even after more than a year, there is “complete lack of transparency” on the details of any of the projects, the note states, this is happening despite the fact that AIIB’s core principles say that it stands for “openness, transparency, independence and accountability”, with the mode of operation being “Clean, Lean, and Green.”
Hinting that the Government of India (GoI) should primarily take the blame for such lack of transparency, the note says, NIIF has been set up “as an alternative investment fund (AIF) with a planned corpus of Rs 40,000 crore (USD 6 billion)”, with GoI deciding to “commit up to 49 per cent of NIIF’s target capitalization, with the balance 51 per cent of commitments expected to be raised from institutional investors like AIIB.
Pointing out that, already, funds worth USD 1,100 million are proposed to be invested through NIIF, the note states, of this USD 200 million are proposed to come from AIIB, but so far little is known about how the envisaged projects would comply by investment guidelines will reflect the AIIB’s Environmental and Social Exclusion List, and the Environmental and Social Standards.
According to the note, the most significant risk associated with funding NIIF projects is the mandate to restart ‘stalled’ infrastructure projects, something that Prime Minister Narendra Modi has “vowed” to do, “especially in the coal, power, petroleum, railways and road sectors. It underlines, “Raising finance to restart stalled projects brings with it high social and environmental risks. The reason many projects are stalled often relate to land, and environmental and social restrictions in place.”
Stating that it is local resistance that stalled projects these – mainly in coal mines and power plants sectors – because of their potential impacts like threat to displace and impoverish communities, destroy forests or pollute rivers, the note says, “Restarting such projects brings with it a host of risks, not least the reputational risk to any financier involved.”
The note quotes an authoritative study to say that, “Almost 80 per cent of land conflicts arise out of development and industrialisation processes, with infrastructure being the single largest cause”, adding, “Detailed investigation of 21 projects involved in disputes related to the possession and acquiring of land revealed the major reasons to be land disputes and resistance by local communities to the projects.”
Significant risks are associated with funding ‘stalled’ infrastructure projects mandated by Prime Minister Modi, especially in the coal, power, petroleum, railways and road sectors
Insisting that these are “these are serious concerns”, the note says, it is essential for AIIB to “publicly disclose its investments so that the affected communities and other stakeholders are aware about the projects and of their impacts. This will help affected communities to approach AIIB’s accountability mechanism or its board to ensure that the subprojects comply with its environmental and social standards.”
The note says, even renewable energy projects may become problematic, the note says, “The vast majority of solar power in India comes not from decentralised rooftop panels but expansive parks. Indian authorities have enticed developers by acquiring large tracts of land, building transmission links and offering up buyers for the new power, usually state-owned companies with low default risk.”
It adds, “These mega-projects necessitate the acquisition of enormous land areas. There are already three recorded conflicts related to land acquisition for renewable energy projects, one of them being the ultra-mega solar park, with a capacity of 500 MW in Anantapur district in western Andhra Pradesh.
“Even with renewable energy projects, there are concerns around the scale of environmental and social impacts as they resemble other mega projects in their impacts on local communities and require the same transparency and risk management”, the note says.
It continues, “It is essential that at a time when investments in the renewable energy sector are rightly being called for, we do not fall in the same trap of fossil fuel-based projects, which required massive land acquisitions, displacement resulting in land conflicts, loss of the livelihoods and destruction of ecosystems.”
Demanding that AIIB, while investing in such projects, should follow “environmental and social framework stringently”, note says, this is particularly important because AIIB is an AAA credit-rated bank, and its investment in NIIF would help make NIIF a more attractive investment vehicle for others. “This raises questions about how the AIIB can help to influence the wider portfolio of NIIF towards more sustainable infrastructure”, it wonders.

Comments

TRENDING

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

'Anti-poor stand': Even British wouldn't reduce Railways' sleeper and general coaches

By Anandi Pandey, Sandeep Pandey*  Probably even the British, who introduced railways in India, would not have done what the Bhartiya Janata Party government is doing. The number of Sleeper and General class coaches in various trains are surreptitiously and ominously disappearing accompanied by a simultaneous increase in Air Conditioned coaches. In the characteristic style of BJP government there was no discussion or debate on this move by the Indian Railways either in the Parliament or outside of it. 

Why convert growing badminton popularity into an 'inclusive sports opportunity'

By Sudhansu R Das  Over the years badminton has become the second most popular game in the world after soccer.  Today, nearly 220 million people across the world play badminton.  The game has become very popular in urban India after India won medals in various international badminton tournaments.  One will come across a badminton court in every one kilometer radius of Hyderabad.  

Faith leaders agree: All religious places should display ‘anti-child marriage’ messages

By Jitendra Parmar*  As many as 17 faith leaders, together for an interfaith dialogue on child marriage in New Delhi, unanimously have agreed that no faith allows or endorses child marriage. The faith leaders advocated that all religious places should display information on child marriage.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Ayurveda, Sidda, and knowledge: Three-day workshop begins in Pala town

By Rosamma Thomas*  Pala town in Kottayam district of Kerala is about 25 km from the district headquarters. St Thomas College in Pala is currently hosting a three-day workshop on knowledge systems, and gathered together are philosophers, sociologists, medical practitioners in homeopathy and Ayurveda, one of them from Nepal, and a few guests from Europe. The discussions on the first day focused on knowledge systems, power structures, and epistemic diversity. French researcher Jacquiline Descarpentries, who represents a unique cooperative of researchers, some of whom have no formal institutional affiliation, laid the ground, addressing the audience over the Internet.

Article 21 'overturned' by new criminal laws: Lawyers, activists remember Stan Swamy

By Gova Rathod*  The People’s Union for Civil Liberties (PUCL), Gujarat, organised an event in Ahmedabad entitled “Remembering Fr. Stan Swamy in Today’s Challenging Reality” in the memory of Fr. Stan Swamy on his third death anniversary.  The event included a discussion of the new criminal laws enforced since July 1, 2024.

Hindutva economics? 12% decline in manufacturing enterprises, 22.5% fall in employment

By Bhabani Shankar Nayak*  The messiah of Hindutva politics, Narendra Modi, assumed office as the Prime Minister of India on May 26, 2014. He pledged to transform the Indian economy and deliver a developed nation with prosperous citizens. However, despite Modi's continued tenure as the Prime Minister, his ambitious electoral promises seem increasingly elusive. 

Union budget 'outrageously scraps' scheme meant for rehabilitating manual scavengers

By Bezwada Wilson*  The Union Budget for the year 2024-2025, placed by the Finance Minister in Parliament has completely deceived the Safai Karmachari community. There is no mention of persons engaged in manual scavenging in the entire Budget. Even the scheme meant for the rehabilitation of manual scavengers (SRMS) has been outrageously scrapped.