Dr. Jim Yong Kim’s Dilemma: International Finance Corporation and the Tata Mundra Power Plant

This case is the Winner of the 2015 oikos Global Case Writing Competition (Sustainable Finance track), organized by oikos International, Switzerland.




Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

Abstract

The case study is about the dilemma faced by Dr. Jim Yong Kim (Kim), President of the World Bank Group, related to International Finance Corporation’s (IFC) funding of the Tata Mundra Project in India.

The Mundra plant was one of the Ultra Mega Power Projects (UMPPs) conceived with the objective of providing cheap electricity to power-starved states of India. Coastal Gujarat Power Limited (CGPL), a wholly-owned subsidiary of Tata Power, implemented the project with funds from various organizations including a funding of US$450 million from IFC.Before the Tata Mundra power project went on stream, everyone related to the project claimed that it would be beneficial for infrastructure development, economic growth, as well as for the poor communities living in areas near the power plant site, but the project soon started facing some serious criticism on the environmental and social fronts...

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Issues

The case is structured to achieve the following teaching objectives:

  • Understand the significance of sustainable finance and the issues and challenges faced by banks and financial institutions related to this.
  • Understand the issues and challenges faced by banks and financial institutions in relation to funding energy projects.
  • Discuss and debate whether IFC did the right thing in financing the Tata Mundra project, and then maintaining the stand despite mounting criticism from various stakeholders.
  • Understand the challenges faced by IFC going forward and explore the ways in which it can overcome the challenges.

Contents
INTRODUCTION
WORLD BANK GROUP AND INTERNATIONAL FINANCE CORPORATION
INVESTMENT SERVICE OF THE IFC
ELECTRICITY CRISIS IN INDIA
ULTRA MEGA POWER PROJECTS: HOPE FOR MILLIONS
THE TATA MUNDRA PROJECT
INTERNATIONAL FINANCE CORPORATION AND THE PROJECT
ENVIRONMENTAL ISSUES
SOCIAL ISSUES
COAL PRICE HIKE ISSUE
COMPLAINT OF MASS
FINDINGS OF CAO
IFC’S RESPONSE
LOOKING AHEAD
EXHIBIT

Keywords

Sustainable Finance, Sustainability for banks and financial institutions, Banks and the Energy sector, Project finance, Coal financing, Human rights as a Management issue; Human rights and sustainability, Businesses as human rights advocates, Business-government-society relationship, Financial Institution’s Stakeholder Constituency, Stakeholder management, Stakeholder tension, Corporate Sustainability, Business Ethics, Corporate Social Responsibility

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