The Bank activated its Independent Investigation Mechanism review of Cana Brava in response to a request from persons affected by construction of the project represented by the Movimento dos Atingidos por Barragens (MAB), which alleged deficiencies in resettlement as well as other issues concerning social and environmental sustainability.
The Independent Panel found that the Bank had complied with many of its Operational Policies, but it also found that the Bank failed to fully comply with the Bank Operational Policy OP-710 Involuntary Resettlement. Management’s response did not agree with the Panel’s conclusions and contended that the Bank complied with all policies.
Following discussion at the Board, the Executive Directors were not able to reach consensus on whether the Bank’s Resettlement Policy was violated and, if such violation occurred, whether there were material adverse effects. Board members noted that the area of the project was affected by economic and social disadvantages before the initiation of the project.
The Board fully supported the Independent Panel’s key recommendations regarding the need for additional social and environmental safeguard staff and budget resources, sufficiently early resettlement component screening, and clarification of the lines of communication between the IDB’s Private Sector Department (PRI) and the Bank’s country offices. The Board welcomed the commitment of IDB management to continue to implement actions related to these Panel recommendations and an initiative supported by several local companies, with the potential support of the Multilateral Investment Fund, to establish an economic and social development fund to address broader economic and social issues in the Cana Brava project area.
The IDB provided a $75 million loan from ordinary capital (A loan) to support the development, construction and maintenance of the Cana Brava Hydroelectric project, a privately owned 450 megawatt facility located 250 kilometers north of Brasilia on the Tocantins River. In May 2005 the IDB loan was prepaid in its entirety.
The Bank’s Independent Investigation Mechanism reports directly to the Board of Executive Directors and may apply in cases of complaints that the Bank has failed in the design, analysis or implementation of proposed or ongoing operations to follow its operational policies and such failure could result in material adverse effects to groups of people in the areas of influence of the project.