Hanging by a Thread: Indigenous Peoples Rights in Renewable Energy Transition
Also available in Nepali
This report examines the implementation of Free, Prior, and Informed Consent (FPIC) in the context of hydropower development projects in Nepal, a right explicitly enshrined under international law and policy safeguards (akin to internal rules) of Multilateral Development Banks (MDBs). Focusing on four major projects – Likhu Project, Tanahu Project, Upper Trishuli-1 (UT-1) Project, and Upper Arun Project – the report evaluates whether FPIC was meaningfully conducted and respected during project planning, design, implementation, and operation (across “project cycle”). This also includes the evaluation, whether FPIC was carefully considered during the project proposal, appraisal, negotiation and approval phases within MDBs, where decisions regarding the financial aspects of the project were taken. Even if indirectly placed as due diligence, assistance, supervision, monitoring obligations, FPIC is as much an independent obligation of the MDBs, as of the state authorities and private actors implementing the project, and their internal rules oblige MDBs not to finance projects that do not comply with their safeguards policies. Where such non-compliance comes to knowledge subsequently, MDBs are required to undertake all efforts to pursue corrective actions, including suspension or termination of the project where need be.
The report finds frequent shortcomings, including failures by the Nepal Electricity Authority (NEA) and other state authorities, private developers, and MDBs, to adhere to FPIC requirements, resulting in adverse social, cultural, and environmental impacts on indigenous peoples. It finds that even in projects where the responsible ‘project actors’ (in this report refer to state authorities, state-owned enterprises, MDBs, private companies, and consultants who are involved in hydropower projects’ initiation, planning, approval, implementation, and evaluation) claimed that FPIC was conducted, it did not reflect fully informed, timely, and meaningful consent, nor did it respect indigenous peoples’ rights to participatory decision making via their own systems of governance, or following
community protocols. Instead, project actors repeatedly used or legitimised narratives, and acted or omitted to act in ways that had the effect of disentitling rights holders from fully and meaningfully participating in the process, or pre-deciding project outcomes. In other words, a lack of meaningful conduct of FPIC is inherent to all these hydropower projects.
Project actors’ stances reflect either, a lack of understanding regarding the contents of FPIC as a right in international law— to which MDB’s internal rules and state parties’ regulatory frameworks commit to be aligned— or a willingness to overlook these standards, for instance, in working with a borrower, project implementer, or state regulator, that consistently fails to comply. This is even though MDB’s internal rules explicitly make the consideration of the borrower’s capacity and commitment to implement safeguards a material consideration as early as the project selection phase, and then throughout, in for example, in the determination of risk categorization - which further determines how frequent and detailed project monitoring should be - and finally, require them to terminate relationships where they are unable to exercise any leverage, or the exercise yields no corrective actions.
