An ‘Inspection Panel’ investigation into the implementation of the World Bank’s $3.75-billion Eskom Investment Support Project, or EISP, has found instances of noncompliance and inconsistency with bank policies, and has raised concerns about potential future harm arising from the Medupi project.

However, no instances of current harm stemming from the noncompliance were discovered and the bank pledged to continue to support and monitor the project through to 2022.

The panel was assembled in July 2010, following a request for an inspection of the Medupi project. But the bank’s board authorised a full investigation of EISP.

The probe focused on the bank’s operational policy relating to the use of ‘borrower systems’ – in this instance South Africa’s environmental, legal and institutional frameworks and safeguards – to address the bank’s requirements in these areas.

It found that, in most respects, the World Bank’s analysis of “equivalence of safeguards” complied with its policy on the ‘Use of Country Systems’ in deciding to use the South African system for environmental and social impact management.

However, instances of noncompliance or inconsistency with World Bank policies were also found, specifically in relation to:

• The assessment of equivalence and acceptability, in particular on issues relating to assessment of cumulative impacts; independent expert oversight and capacity constraints.
• The impacts on air quality and health.
• The impacts on water resources.
• The impacts on public infrastructure and services.
• And, inadequate consideration and economic analysis of alternatives and risks, particularly with regard to water and air externalities.

Panel chairperson Alf Jerve said there was concurrence between the panel and the bank’s management that South Africa’s legal and institutional framework for environmental and social safeguards supported the application of the Use of Country Systems policy.

But Jerve added that there was also agreement that the Medupi power plant entails “substantial environmental and social risks” that have to be carefully managed.

World Bank management recommitted to monitor the project and potential future impacts, and to remain “engaged with the borrower regarding the management and mitigation of any potential adverse impacts that may arise”.

Eskom indicated to Engineering News Online that it would not be making a statement on the panel’s report.