Case story

  • Chile

CAO Case - Pehuenche Complaint Regarding Pangue Hydroelectric Project, Chile 2002

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The Pangue Hydroelectric Project involved a series of proposed hydroelectric dams on the upper BioBio River, Chile. In July 2002, a group of Pehuenche women lodged a complaint with CAO in relation to the following concerns:

  1. Inappropriate and weak social and environmental mitigation measures; and

  2. Lack of adequate compensation for those individuals affected by the project.

IFC held 2.5 percent of the equity interest in the Pangue Project from October 1993 until divestment in July 2002. As a result of various complaints lodged by local groups and NGOs at the time of dam construction, the President of the World Bank Group seconded Jay Hair, President of the International Union for the Conservation of Nature, to undertake an independent inquiry into the complaints, which became known as the Hair Report.

CAO Action

Despite divestment in 2002, CAO accepted the complaint based on the fact that the complaint related directly to IFC’s role in the project over a number of years; to promises and commitments made; and to previous opinion by independent investigations and consultant reports requiring certain actions be undertaken by IFC. In July 2002, CAO Compliance conducted an appraisal for audit of the project and commenced assessment in October 2002.


Case Status: Closed

The Appraisal Report, completed in May 2003, recommended that IFC disclose the Hair Report and disseminate documents it had commissioned including emergency response plans and downstream impact studies. At the request of the complainants, CAO Ombudsman continued to monitor the settlement by working with local and indigenous organizations to address broader, cultural impacts of the project. In February 2006, a settlement agreement concerning local development capacity building was finalized and CAO continued to monitor implementation of this agreement.

Contributor(s): This article was modified by Kyle (18), Nicolaclayre (2), and Pic1 (1).