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IDB Board of Directors receives report on complaint based on thermoelectric project in Mexico

The Board of Executive Directors of the Inter-American Development Bank received the conclusions of report prepared by a panel of experts which found that the IDB had complied appropiately in following its operational policies in a project to build a thermoelectric plant in the Mexican state of San Luis Potosí, save for certain aspects of its information disclosure policy.

The report was drafted by a panel established under the IDB’s independent investigation mechanism after members of a Mexican community lodged a complaint. The panel included Argentine economist Juan Jose Llach, Chilean environmental lawyer Gonzalo Biggs and U.S. environmental impact analyst Donald Rhatigan.

The panel also received support from a consultant specialized in environmental issues, who concluded that the environmental controls in place in the project reflect the state of the art in best available technologies.

Based on the investigative panel’s recommendations, the Board of Executive Directors asked the IDB’s management to carry out studies to determine the viability of including social components in “enclave” projects financed by the Bank.

The Board also took note of the existence of an environmental trust fund established by Termoelectrica del Golfo to support priority community development projects.

The independent investigation mechanism was established to receive complaints about possible violations of IDB operational policies in projects financed by the Bank that could cause material harm to groups of people in the areas of influence of the projects.

In this case, the investigation was requested by members of the community of Tamuin in San Luis Potosi regarding Termoelectrica del Golfo, a thermal generation plant that supplies electricity to cement factories in central and northern Mexico. In 1999 the IDB approved a $75 million loan from its ordinary capital for the project. A group of commercial banks provided a $102.3 million syndicated loan.

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