Three French banks have said they will not invest in the Rampal power plant, as a report found that it failed to meet minimum environmental and social standards established by the Equator Principles and the International Finance Corporation’s Performance Standards.
The 1,320MW Rampal coal-fired power plant has received hefty support from both the Indian and Bangladeshi governments as a symbol of sub-regional cooperation but has seen foreign investors shy away from participation in the project.
The Rampal project is one of several under the Fast Track Project Monitoring Committee, chaired by Prime Minister Sheikh Hasina, that was set up after the Awami League was re-elected, to steer large projects to completion.
The plant’s siting has led to concern among environmentalists who are worried about the effects it will have on the nearby Sundarbans mangrove forests.
There is also concern about the dismal environmental track record of the Indian company that will be building it. Six months earlier, two Norwegian pension funds pulled out their investments from India’s National Thermal Power Corporation that is building the project, The Guardian reported.
During his visit to Bangladesh on June 6 India’s Prime Minister Narendra Modi endorsed the 1,320 MW Rampal coal-based thermal power project, saying: “The 1,320 MW Rampal power project is making progress in accordance with your laws and regulations. We can do more together in the power sector, here and in India.”
Under an agreement signed in 2012, India’s largest coal power company, the state-owned National Thermal Power Corporation (NTPC) would develop the plant in Khulna division as a joint venture with Bangladesh’s Power Development Board.
Activists are concerned the plant, less than 10 miles from the protected Sundarbans mangrove forest, would lead to its environmental degradation from increased ship traffic, dredging and pollution of air and water.
Coal-fired thermal power plants belch toxic gases that could impact wildlife and human health and forest quality in the neighbourhood.
Before Modi arrived in Dhaka, activists urged the leaders of the two countries to stop the plant. On May 21, the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports held a rally in front of the National Press Club. If the project wasn’t stopped, the secretary of the organisation said it would escalate the movement.
On June 5, other organisations such as National Committee for Saving the Sundarbans, Bangladesh Poribesh Andolon, Bangladesh Environmental Lawyers Association, and Poribesh Bachao Andolon renewed calls to scrap the plant.
Their fears are not unfounded, The Guardian reported. India’s first environmental rating of coal-fired thermal plants was published by the Green Rating Project of the Centre for Science and Environment, Delhi. Since NTPC refused to collaborate, the rating was based on primary data and publicly available information.
In India, the company operates 25 thermal plants and a further nine under joint venture collaborations. Six of these plants scored poorly on environmental parameters, rating a mere 16-28% compared to the best possible rating of 80%.
Last month, three French banks declared they would not invest in the project.
Stanislas Pottier, global head sustainable development of Crédit Agricole, said: “Crédit Agricole SA Group has no plans to finance the Rampal coal power plant in Bangladesh, given our intervention rules and the risks associated with this project.”
While Jean-Michel Mépuis, sustainable development and social and environmental responsibility director of Société Génerale, said: “Societe Generale does not provide any financial advisory services and is not currently contemplating any financing related to the Khulna coal-fired power project, located in Rampal, Bangladesh.”
BNP Paribas, one of the corporate sponsors of the UN climate summit to be held in Paris in December, also declined to invest in the plant.
Bank Track, a coalition of organisations tracking the financial sector, released its analysis of the Rampal plant under the Equator Principles, an environmental and social risk management framework for financial institutions.
In its executive summary, the reports says: “The analysis shows that serious deficiencies in project design, planning and implementation and due diligence obligations render the project non-compliant with the minimum social and environmental standards established by the Equator Principles, as well as the International Finance Corporation’s Performance Standards.”
This failure to achieve even minimum standards could make any financial institution nervous of funding the project.
Loans are expected to fund up to 70% of the $1.5bn project, while India and Bangladesh will fund the remaining 30% equally.
However, the Bangladesh Planning Commission has refused approval. It said the project was not compliant with the country’s existing policy nor was the funding and ownership of the plant clear. This leaves even the 15% Bangladesh stake in the project uncertain.
Even before funds could be raised to build the first plant, Bangladesh’s Power Development Board has inexplicably started acquiring land for a second plant, The Guardian report said.
