In 2007, Coastal Gujarat Power Limited, a subsidiary of Tata Power, began development of a 4,150MW coal-fired power plant in Mundra, a port town in the Kutch district of Gujarat, India. The plant, known as the Mundra Ultra-Mega Power Plant, is located 3km from the Gulf of Kutch.   At the time of IFC’s investment, the project’s total cost was estimated at US$4.14 billion, of which IFC financed US$450 million in the form of an A loan. IFC’s direct involvement with the client lasted until September 2018 when CGPL prepaid its loan.

In June 2011, CAO received a complaint regarding IFC’s investment in CGPL from Machimar Adhikar Sangharsh Sangathan (MASS), the Association for the Struggle for Fishworkers’ Rights, representing fisher people living near the project development site. The complainants self-identified as belonging to a minority community of Wagher Muslims for whom fishing is an important traditional livelihood and who live in two coastal fishing tent communities: Tragadi and Kotadi bunders, situated between and to the east of the power plant’s cooling water intake and outfall channels.

The complaint raised concerns about the project’s social and environmental impact on fishing communities, specifically: deterioration of water quality and fish populations, blocked access to fishing and drying sites, forced displacement of fishermen, community health impacts due to air emissions, and destruction of natural habitats, particularly mangroves. The complainants also argued that IFC and CGPL did not adequately identify and mitigate the impacts on fishing communities, and that the project’s cumulative impacts were not adequately assessed.

In June 2011, CAO found the complaint eligible and initiated an assessment. A dispute resolution team visited the site in August and October 2011 to engage with the parties and explore resolution options. Following these discussions, the complainants requested a transfer to CAO’s Compliance function. The Assessment Report is available in English and Gujarati.

In February 2012, the case was transferred to Compliance for appraisal of IFC’s E&S performance.

In July 2012, CAO completed the appraisal and found that several issues merited further inquiry. The Appraisal Report is available in English and Gujarati.

In October 2013, CAO published its compliance audit (Investigation Report, available in English and Gujarati). While acknowledging IFC and CGPL’s efforts on E&S aspects of a large and complex project, the audit confirmed key elements of the complaint. It found that IFC’s E&S due diligence was not commensurate with project risks, including insufficient consideration of vulnerable communities during E&S risk and impact assessment. CAO also identified gaps in IFC’s supervision related to air quality, the marine environment, land access, and project monitoring.

In November 2013, IFC issued a statement and action plan (available in English) in response to the audit. CAO began monitoring implementation, and published its first monitoring report January 2015 and its second monitoring report February 2017, and conducted a monitoring visit in February 2016.

In September 2017, CAO completed a compliance appraisal of a related complaint (India: Tata Ultra Mega-02/Tragadi Village), which raised similar concerns, and merged the cases for monitoring. In September 2018, CGPL repaid its IFC loan.

Actions from 2017 to 2018 were reported in CAO’s third monitoring report, in which CAO found that IFC had implemented most commitments related to E&S studies. However, these actions did not address the audit findings concerning the complainants’ concerns. Key observations included a lack of documented impacts on fishing communities, particularly seasonal fishers; limited evidence of effective stakeholder engagement; an incomplete livelihood plan for pagadiya fishers (traditional foot fishers from the coastal regions of Gujarat); continued exceedances of PM10 standards; marine studies lacking a defined mixing zone or comprehensive biodiversity assessment; the absence of a cumulative impact assessment; and gaps in monitoring.

In March 2025, CAO conducted a field visit. Communities continued to report declining environmental quality, reduced fish stocks, agricultural losses, coastal erosion, fly ash dust, salinity in water supplies, and health issues. While most complainant concerns likely stem from cumulative environmental impacts of industrial development in the region, CAO noted several impacts likely attributable to the IFC-financed project, including coastal erosion and ecosystem degradation near the plant’s cooling water outfall, fishkill from intake systems, coal dust and fly ash deposition, and skin irritation due to exposure to water discharged from the outfall. Mitigation measures identified included a recirculating cooling water system and a coastal protection program.

Although IFC received voluntary commitments from its client prior to repayment, the absence of a commercial relationship and the time elapsed since IFC’s last efforts in 2018 made it unlikely that IFC would complete the 2013 Action Plan or address the CAO Audit findings. Therefore, CAO decided to conclude the monitoring process.

CAO noted that the process has been unsatisfactory for complainants, whose concerns about health, livelihoods, and the environment remained unresolved. CAO considered that addressing the documented E&S challenges in the Mundra region would benefit from a collaborative approach. A regional program involving government agencies, multilateral development banks including the World Bank and Asian Development Bank (ADB), local industries, and affected communities would help address the cumulative impacts of industrialization and growth through ecosystem restoration, infrastructure development for safe water supply, and sustainable livelihood opportunities for affected communities.