Board approves the Inspection Panel' Investigation of the Argentina/Paraguay- Yacyretá Hydroelectric Project
WASHINGTON, September 20, 2002—The World Bank's Board of Executive Directors approved, on September 9, 2002, the Inspection Panel's recommendation to conduct an investigation into the matters alleged in a Request for Inspection related to the Yacyretá Hydroelectric Project, which is partially supported by Loan 2854-AR (Argentina-SEGBA V Power Distribution Project) and Loan 3842-PA (Paraguay-Reform Project for the Water and Telecommunication Sector). The Board took its decision on a no-objection basis without judging on the merits of the Request.
The Panel's Report and Recommendation concluded that: (a) the eligibility criteria set forth in the Panel's Resolution for the Request and the Requesters have been met, and (b) the Request and Management Response contained conflicting assertions and interpretations about the issues, the facts, compliance with Bank policies and procedures, and actual harm and potential harm that the Panel could only address during the course of an investigation. The Panel therefore recommended that the Executive Directors authorize an investigation.
The Panel will investigate whether the Bank has complied with its own policies and procedures, inter alia, on Dam and Reservoir Projects (OD 4.00), Environmental Assessment (OD 4.01), Involuntary Resettlement (OD 4.30), Project Supervision (OD/OP/BP 13.05), Project Monitoring and Evaluation (OD 10.70), and Suspension of Disbursements (OD 13.40), as claimed by the Requesters.
On May 17, 2002, the Panel received a Request for Inspection submitted by Federación de Afectados por Yacyretá de Itapúa y Misiones (FEDAYIM), a local nongovernmental organization acting on its behalf as well as of more than 4,000 families allegedly affected by social and environmental impacts of the Yacyretá Hydroelectric Dam, and six coordinators of people living in the following districts: San Cosme y Damián, Distrito Cambyreta, Barrio Pacu Cúa, Barrio Sta. Rosa Mboy Caé, Arroyo Potiy, Ayolas, Barrio Santa Rosa all in Paraguay. The Request also attached letters from the Mayors and Municipal Councils of the City of Encarnación and the District of Cambyreta endorsing the Request. The Panel registered the Request on May 30, 2002.
The Requesters claim to represent families affected by the raising of the level of the reservoir of the Yacyretá hydropower plant to 76 meters above the sea level and, possibly, higher. According to the Request these families were not appropriately identified and "quantified in their real dimensions" and, as a consequence, thousands of them were excluded from existing compensation and mitigation programs in spite of the fact that, they have owned and occupied lands affected by the dam for more than 20 years. The Requesters further claim that families for whom a creek flood control program (PDA) was established are being replaced by families from other neighborhoods who are in no way affected by the devastating situation suffered by those living on the creek banks.
The Request also complains about the environmental contamination and adverse health impacts caused by the elevation of the reservoir. According to the Requesters, this situation was further aggravated by the housing developments built under the project in Buena Vista and San Pedro, where the wastewater spills into the Potiy, Santa María, and Mboi Caé creeks, leaving them totally contaminated.
The Requesters claim that the Bank has failed to ensure that project affected people receive suitable compensation and resettlement packages. As an example, they cite the compensation approved for the families living in the Santa Rosa, Arroyo Pora, and Ita Paso neighborhoods. They assert that the amount of compensation was negligible, and that the amounts would, in no way, "make it possible for the families to buy new land and rebuild their homes." Similarly, they allege that the Bank and the project implementing entity, EBY, have no plans to restore the families' productive infrastructure. Finally, the Request claims that the brick factories' employees have not received any compensation, which was allegedly given only to the factories' owners, and have been left unemployed and in very difficult economic conditions.
Management denies these allegations and asserts that it has complied with all the relevant Bank policies and procedures. In its Response to the Request for Inspection, Management points out that the there is no causal relationship between a number of the Request's allegations and the raising of the reservoir's level to the current 76 masl. Thus, according to the Response, the problems of flooding on the banks of the urban creeks and along the Parana River, of water contamination, environmental pollution and adverse health impacts on the population have not been caused by the reservoir, but by other reasons, such as natural factors, i.e. rainfalls and the El Niño phenomenon. The Response also emphasizes that EBY will finance and supervise the construction of a new sewage collection system and a wastewater treatment plan in Encarnación, Paraguay, whose location, although disputed by the population, is based on an adequate Environmental Assessment and the advise of independent consultants.
In response to the claim that thousands of families have been excluded from compensation and mitigation programs, Management states that proper compensation and resettlement have been provided to all affected families, identified through the proper censuses, who received amounts even above replacement costs. With respects to the complaint that the employees of brick factories have not been awarded compensation, Management claims that, according to the resettlement plans, EBY compensated the brick factory owners who are, in any case, bound by Paraguayan law to give their employees a severance payment. Finally, in terms of income restoration of resettled people, Management notes that urban families who relocated close to their former workplace have recovered their previous income, but recognizes, however, that families relocated on sites relatively distant encountered unexpected problems, to solve which EBY will implement short and long term measures.
The complete text of the Panel's Eligibility Report and Recommendation, including the Request for Inspection and the Management Response will be available on this website in the Panel Report Section. Paper copies can be obtained from the World Bank InfoShop (1818 H Street, NW, Washington, DC 20433 tel.: (202) 458-5454; fax (202) 522-1500, and the World Bank Country Offices in Buenos Aires, Argentina and Asunción, Paraguay.