Tanzania - Sixth Power Project : Eligibilty Report

28473 RECOMMENDATION OF THE INSPECTION PANEL Request for Inspection TANZANIA: Power VI Project (Credit No. 2489-TA) Below is (A) Background information, (B) a Process note, and (C) the Inspection Panel’s (‘Panel”) on whether or not there should be an investigation (“Recommendation”) into allegations made in the above-referenced Request for Inspection (“Request”). Annex 1 contains the Request. The Management’s reply to the Request is provided in Annex 2. A. Background 3. The amendment is no longer a proposal. i. On May 1995 the Panel received a On May 9, 1995 the Executive Directors Request which alleged violations of the approved IDA financing for the EPP. International Devellopment Agency’s (“IDA”) policies in relation to a proposed amendment to B. Process the Development Credit and Project Agreements for Tanzania’s Power VI Project (Credit 2489- 4. After requesting and receiving further TA).’ The amendment proposed a reallocation information from the Requesters, the Panel on of proceeds from Credit 2489-TA for the June 16, 1995 notified the Executive Directors purchase of generating units on an emergency and IDA President of receipt of the Request. basis in order to forestall major power outages in IDA Management was required to submit to the 1995-96 in Tanzania. The purchase and Panel a response to the Request and did so on installation of these units was designated by the July 18. Government as the Emergency Power Project (”EPP”). 5. The required procedural steps to be followed by the Panel and the Management are 2. The filed by a group consisting contained in IDA Resolution dated of the owner and some employees of a September 22, 1993 as supplemented by Tanzanian compan:y (Tannol Holdings subsequent Decisions of the Executive Directors claimed that it was not necessary to restructure (“Resolution”). Under paragraph* 17 the Credit 2489-TA as private sources of funding Chairman must inform the Executive Directors not considered by Management were available; and President promptly upon receipt of a that the proposal was not considered by a Request. The Panel’s “Operating Procedures” -- competent committee at the appropriate time; at paragraphs 16- 18 -- introduce the concept of and that staff improperly influenced the “registration” to avoid passing on requests Government’s decision to request IDA financing which are manifestly frivolous, clearly barred by -- all in violation of provisions of Article V of paragraph 14 of the Resolution, or otherwise IDA’S Articles of Agreement. In addition, the obviously outside the Panel‘s mandate. On the Requesters alleged violations of the Bank’s basis of the information contained in this environmental policies in the preparation of the Request, the Chairman concluded that “prima EPP. facie [it] did not appear to be barred.” Accordingly, pursuant to paragraph 18 of the 1 Resolution, Management was required to Memorandum from the President to the Executive provide the Panel with “evidence that it has Directors entitled “Tanzania: Power VI Project (Credit 2489-TA) - Proposed Amendment to the Development Credit and Project Agreements” IDAm95-54, dated 19, 1995 Unless otherwise stated references to paragraphs in this document are to those of the Resolution.  complied, or intends to comply with the Bank‘s which is the sole prerogative of the Executive relevant policies arid procedures.” Directors. The Resolution was designed to establish a non-juridical forum with non- 6. Paragraph 19 of the Resolution instructs legalistic requirements and procedures to help the Panel to determine whether the Request direct access by adversely affected people on the meets the eligibility requirements contained in ground. Experience to date suggests that paragraphs 12 to 1 4 after receipt of a existing requirements, if strictly interpreted and Management response. In this instance a applied, could become far too complex to enable conclusion could be reached through a field adversely affected people themselves --often review. The Panel considered information poor and illiterate--to file a legitimate claim. obtained during Richard Bissell’s review conducted in the project area on July 28 and 29, C. Recommendation. 1995. The Inspector consulted with the Government of Tanzania, TANESCO (the 9. The recommendation below is based on 3 executing entity), and the Requesters. In the Panel’s assessment of the Request during the accordance with with paragraph 2 1 the Panel period from July 19, 1995 to date and takes into also consulted with the IDA Executive Director account the information provided by the representing Tanzania. Requesters, Tanzanian officials and by Management. 7. The Panel is also required by paragraph 13 of the to satis@ itself that the subject matter of the request has been dealt with by Management and if so, whether it has Alleged Violations of Article V of IDA’S demonstrated either that is has followed, or is Articles of Agreement. taking adequate to follow the relevant L/ policies and procedures. In this case the Management reply did not address, as required, 1O. IDA financing for the EPP has now been approved. Clearly the Executive Directors, in the substance of the Request but dealt accordance with Section 1 (c) of Article exclusively with M,anagement’sviews on concluded that in their opinion private financing eligibility criteria and its “admissibility”. By the was not available on terms reasonable for the terms of the Resolution these issues are to be recipient. The Panel reviewed the allegations determined solely by the Panel after a response that Management’s recommendation to the is received, subject only to any final Executive Directors may have been misleading, L determination by the Executive Directors. In or based on violations of its own policies or this instance Management addressed the procedures, and found that: required questions through ”information ” contained in an Annex. Avoiding a formalistic Prior to their approval of the amendment: approach, the Panel treated Management’s Annex as amounting to the required “Response.’’ Management informed the Executive Directors of the 8. The Panel observes with concern the availability of financing from formalistic approach of the reply. This approach another source on May 9, 1995. appears to introduce additional eligibility requirements that would modi@ the Resolution The Requesters, through Washington Counsel, provided information on the matter directly to The Panel wishes thank the Ministry of Water, Energy and Minerals, officials of TANESCO, and the the Executive Directors on May 8, Bank Resident Mission for logistic support to the 1995. mission. 2  A recommendation of a competent the Requesters to be ineligible as they do not committee was made pursuant to meet the requirements of paragraph 12 of the Section 1 (d) of Article Resolution. With reference to Section 1 (g) of Article V 15. Based on theforegoing considerations, there is no evidence that IDA has diverted the Panel does not recommend that the funds to finance items not included in the Executive Directors authorize an investigation Power VI Project, as amended. into the violations of IDA policies alleged in the Request. Allegations concerning possible unauthorized staff actions in relation to political influences or considerations might amount to administrative misconduct, a matter clearly (outsidethe Panel’s mandate. Attachments 1 1. The Panel does not review decisions of the Executive Directors. The Panel did review Management’s actions in providing information to the Executive Directors. Based on the above findings the Panel is satisfied that Management has followed the requirements of Section 1 paragraphs (a), (d)?and of Article V of IDA‘S Articles of Agreement. Alleged Violations of Operational Manual Statement No. 2.3’6,Environmental Aspects of Bank Work, paragraph 9(c) and (h) (“OMS’) and Operational Directive 4.01 on Environmental Assessment, paragraphs 2,14- 122 (“OD”) 12. Alleged violations of the policies set forth in the OMS and ODs clearly fall within the Panel’s mandate. 13. Based on the results of the Inspector’s field visit, the Panel is satisfied that the Requesters, who reside in Dar es Salaam, could be affected by any possible adverse environmental impact of the EPP. However, the Panel finds that the Requesters failed to demonstrate that their interests are likely to be directly and adversely affected in a material way as a result of any alleged serious violations by IDA of the OMS or OD with respect to the preparation and appraisal of the EPP. 14. In relation i:o allegations concerning the environmental impact the Panel therefore finds 3