Wednesday, Leaked report finds World Bank management failed to consider critical environmental issues in $3.75 Billion loan to Eskom to build one of the largest coal power plants in the World groundWork, Earthlife Africa Jhb, Sierra Club

Durban, South Africa, 7th December 2011 - A leaked Inspection Panel (IP) report reveals significant environmental, social and climate impacts associated with the World Bank's $3.75 billion loan in 2010 to build the 4800 MW coal power plant, Medupi. Local community members have been challenging the illegal sand mining used for the construction of Medupi as it has affected the water flow from the local river. The report found that these impacts, including an estimated release of CO2 emissions of 26 million metric tones every year, were not adequately addressed by the World Bank. It suggests that the Management may have been overly optimistic that their support for one of the largest coal power plant would, "enable the country to achieve a low carbon economy". It notes that the emissions did not violate Bank policy only because the Bank did not have a policy on greenhouse gas emissions. The findings could not have come at a worse time for the World Bank, where on the same South African soil, it is angling for a prized role in the $100 billion green climate fund (GCF).

The report also highlights the failure to consider impacts on water, sand mining, air quality, and the wider environmental impacts of the associated complex of coal-based economic activities (such as coal mining) on the environment and human welfare in the region. Perhaps most worrisome are impacts on water in a region that struggles with existing water scarcity. Local community members have been challenging the illegal sand mining used for the construction of Medupi as it has affected the water flow from the local river.

"The report validates what we already know" says Niranjali Amerasinghe from CIEL. "The Bank failed to comply with its own policies by not adequately considering the very real costs associated with the project's
impacts on water, human health and the environment."

Earthlife Africa Jhb and groundWork met with community representatives on Monday and Tuesday to report back to them on the outcomes of the IP report. The communities are demanding that immediate action be taken to ensure that the negatives impacts of Medupi are stopped. "We are of the opinion that the long overdue report of the Inspection Panel had a big impact on local people's lives and human rights. Damage done to our water supply, infrastucture and land could have been controlled and prevented were it not for the slow action taken by the World Bank," says Susan Goosen of Mogol River Tax Payers Forum.

"We were always concerned that this project was flawed and undemocratic, and the IP investigation has proven our case. The World Bank must take urgent action and withdraw the loan as it contradicts the stated intention of the funding," says Makoma Lekalakala, Programme Officer at Earthlife Africa Jhb.

As local groups demand redress, global civil society is arguing that the report is just the latest in a long line of destructive projects financed by the Bank. Given the World Bank's role as interim trustee of the Green Climate Fund, they are shining a spotlight on its destructive activities such as the funding of Medupi.

"Projects like Medupi suggest they can't be trusted to support the urgent need to move society towards a low carbon future," says Justin Guay of Sierra Club. "Their rhetoric and reality are world's apart."

Whatever happens here in Durban, the World Bank's core energy lending will continue. The next project in the pipeline is a new coal plant and strip mine in the tiny republic of Kosovo. Nezir Sinani, of the Kosovar Institute for Policy Research and Development, is using the lessons learned from Medupi to fight World Bank approval of the plant; "It is now evident that the World Bank has not learnt lessons from the debacle of Eskom, and thus we call on the Kosovo government and the World Bank in particular to stop pushing the coal power facility."

Groups here in South Africa are expressing their solidarity in what increasingly looks like the next controversial project in the World Bank pipeline.

"The World Bank has financed an incredibly destructive project here in South Africa," says Siziwe Khanyile of groundWork. "It wasn't the first, but we need to make it the last."

To download a copy of the Inspection Report (14MB), please go to:

For more information, please contact:

Makoma Lekalakala
Programme Officer
Earthlife Africa Jhb
Tel: +27 11 339 3662
Fax: +27 11 339 3270
Cell: +27 82 682 9177

Siziwe Khanyile
Climate Justice and Energy Campaigner
groundWork, Friends of the Earth, South Africa
Tel:+27 33 342 5662
Fax: +27 33 342 5665
Cell: +27 73 830 8173

Justin Guay
Washington Representative
Sierra Club
Tel: +27 76 388 5602