India - Indira Sarovar Hydroelectric Project

 Indira Sarovar hydroelectric project Report No: ; Type: Report/Evaluation Memorandum ; Country: India; Region: South Asia; Sector: Hydro; Major Sector: Electric Power & Other Energy; ProjectID: P009822 December 29, 1995 India: Indira Sarovar Hydroelectric Project (Loan 2416- IN, Credit 1613-IN, and Special Fund Credit SF 20-IN) The implementation Completion Report (ICR) on the India Indira Sarovar Hydroelectric project (Loan 2416-IN, Credit 1613-IN, Special Fund Credit SF 20-IN) was prepared by the South Asia Regional Office. A Bank Loan for US$157.4 million and IDA and Special Fund credits in the amount of US$143 million equivalent were approved in FY84. About US$140 million under the Loan and US$116 million under the Special Fund and IDA credits were canceled in FY88. The Loan was closed on June 30, 1993, against the original schedule of September 30, 1991, and the undisbursed balance of about US$8 million was canceled. The credits were closed on June 30, 1994, against the same original schedule, and the undisbursed balances of about US$21 million were canceled. The Borrower's comments are in general agreement with the ICR. The original objectives of the project were: (i) to increase the generating capacity of the Madhya Pradesh Electricity Board (MEPB): (ii) to achieve a more efficient use of existing thermal power stations; and (iii) to expand and modernize the MPEB's data processing facilities. The project included the following components: (a) the construction of the 500 MW Indira Sarovar hydroelectric plant (named Bodghat at appraisal); (b) the execution of a pilot program of thermal power plant rehabilitation at the MPEB; and (c) the expansion and modernization of the MPEB data processing facilities. The project failed to substantially achieve any of its original objectives. As explained in the ICR, the hydroelectric plant (accounting for 88 percent of total project cost) was canceled in 1988 in light of concern with the environmental and resettlement impacts of this component. The restructured project was not extended beyond 1994 owing to a lack of progress with the tariff policies of the MPEB. At the time the project was closed, the thermal plant rehabilitation component was only 40 percent complete and the upgrading of data processing facilities was about 60 percent complete. However, MPEB is continuing the implementation of these components with its own resources. Given the partial implementation of even the limited objectives of the restructured project, the Operations Evaluation Department rates its outcome as unsatisfactory and its institutional development as moderate. As MPEB is continuing the implementation of the restructured project (i.e., not including the hydroelectric plant) after project closing, the modest achievements of the project can be regarded as sustainable. As explained in the ICR, the Bank's performance was unsatisfactory. Specifically, appraisal was unsatisfactory because it underestimated the difficulties of inter-departmental coordination within the Government on key environmental and design issues. Also, after the cancellation of the hydroelectric component, the Bank should not have waited for as long as two years to reach agreement on the implementation of the remaining components. These ratings concur with those given in the ICR. The most important lesson from this project is that there must be careful participation in the design and implementation of resettlement and rehabilitation (R&R) plans. An R&R plan had been prepared by the Government and approved by the Bank in 1985, shortly after the approval of the project. However, in the absence of public consultation and the lack of dissemination of information, the affected people expressed serious concerns with the social and environmental impacts of the project. The lack of resolution of this issue led to the cancellation of the hydroelectric power component of the project in 1988. The ICR is good, as it provides a clear and comprehensive description of why the project failed, and correctly identifies the pertinent lessons. No audit is planned.