Seeing is believing

29 November 2010

Greater project transparency can quash community fears about the development of hydro projects, as the Compliance Advisor Ombudsmen discovered at the Allain Duhangan project in India

The 192MW Allain Duhangan hydropower project is a run-of-river scheme that began commercial operation in April 2010. Located in the Kullu district of Himachal Pradesh in northern India, it was built on the Allain and Duhangan tributaries of the Beas river. The build-own-operate project is owned by the Allain Duhangan Power Company Limited. Sponsorship was given by the Indian firm Bhilwara Group, with support from SN Power and the International Finance Corporation (IFC).


Although the design of the Allain Duhangan project involved diverting the majority of the Duhangan, project sponsors had made commitments to ensure that sufficient water flows were left for the downstream village of Jagatsuk. However, in October 2004, village residents were unhappy and lodged a complaint with the Compliance Advisor Ombudsman (CAO).

The CAO is an independent office within the World Bank Group charged with responding to complaints raised by people who believe they may be negatively affected by IFC-supported projects. It reports directly to the president of the World Bank and seeks to assist parties in finding a jointly agreed settlement to the complaint that has been raised.

The complainants believed that water supplies would dry up due to the project’s diversion of the Duhangan river, with negative consequences on agriculture and tourism. They also expressed concerns about safety during construction, protection of religious sites affected by water diversion, plus the adequacy of potable water. The complainants also stated that the Environmental and Social Impact Assessment (ESIA) documents prepared by the sponsor neither adequately considered the legitimate concerns of the villagers nor provided a sufficient basis for informed consultation on key project impacts.

Upon initial assessment, CAO became concerned about the lack of methodological rigour in the calculation of water flows and therefore the manner in which ESIA requirements were managed. CAO also noted that the ESIA document did not contain sufficient detail to allow an informed decision on project environmental and social viability.

To make matters worse, the community also lacked a formal representative body to express its concerns. The local government (the Panchayat of Jagatsukh) dealt directly with the project company but failed to communicate effectively with the local community. In turn this led to misunderstandings in the village about the distribution of project benefits.

In response, CAO made five site visits throughout 2005-7. It instigated key stakeholder dialogue with complainants, the village government, Bhilwara company officials and the district commissioner.

In 2006, as construction was underway, the CAO team was joined by consultants from the Consensus Building Institute (CBI), a global dispute resolution organisation. They were tasked with the role of helping to design and facilitate conflict resolution between community stakeholders and the project owners. It also helped to bring local language capacity and cultural knowledge to the team which was critical in understandings village dynamics.

Over a period of two years CAO worked with the consultant team to maintain contact with all stakeholders and keep up-to-date with project activity. Improvements were also made to protect water supplies; additional water studies were released; and safety and labour conditions were addressed and enhanced. Furthermore the CAO generated a Commitments Register for the hydropower project as a means of tracking company performance against the ESIA.

In December 2006 the IFC visited the site to evaluate the situation and was satisfied with the company’s fulfilment of social and environmental obligations. The case was closed in May 2007. After a period of six months, based on the Commitments Register and periodic supervision reports from the IFC, the CAO accepted that obligations had been met. By February 2008 the CAO had not received any more complaints relating to project and so the case was concluded one month later in March.

Lessons to learn

CAO believes that its involvement helped achieve a number of key project-related outcomes, including better information sharing, greater company accountability, and on the ground improvement on key social and environmental issues. It was able to provide a channel for community grievances.

As the concluding documents about this CAO case stated, building relationships with groups that are on the boundary of project impacts is essential. Although the sponsor and IFC believed that there would no significant impact on the Jagastsuk community due to the EIA, some community members, such as farmers, saw little to gain and much to lose from the project. There was much distrust of the sponsor and local government and the community found it difficult to believe that commitments would be upheld.

In hindsight it can be seen that detailed social mapping could have uncovered key sectors of the community, and identified their perceptions of risks and opportunities. This could have resulted in solutions being found much earlier along in the process.

Greater project transparency also played a key role in settling issues at the Allain Duhangan project. CAO was keen to share all information. It strategically chose to make all documents publicly available and encouraged the hydro company and community to address specific concerns in a transparent manner. Greater transparency can help reduce misunderstandings and false rumours about project activity and benefits, as well as improve relationships within the community and between the company and community.

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