The bank's inspection panel has launched a probe into allegations by Earthlife Africa and Groundwork on behalf of the Lephalale community of South Africa, where the multi-billion-dollar project is to be sited.
The panel is tasked with ensuring that bank-financed projects avoid harming people and the environment.
The project under investigation is the US$3.04 billion Medupi Power Plant and transmission system. But this is just one component of a three-part infrastructure project, worth US$3.75 billion. The second component includes the $260 million 100MW Sere wind power project in the Northern Cape province.
The panel recommended the investigation at the end of July. It will consider allegations of violations of World Bank operational policies and procedures and report on actions taken by the bank's management during the investigation to address the issues of compliance and the concerns raised by two non-governmental organisations (NGOs).
The request for the investigation was submitted by community members living in the project area in Lephalale, in Limpopo Province, through Groundwork and Earthlife Africa, two NGOs based in South Africa.
According to the panel's report, these communities have expressed concerns about the direct impacts of the Medupi coal-fired power plant and its associated facilities, and broader societal concerns including health, economy, water, culture and livelihoods.
The chairman of the inspection panel, Roberto Lenton, says: "Some of the harms listed are local in nature and affect the community members in Lephalale directly, whereas others may have wider impacts beyond the local area."
Under the World Bank's deal with developer Eskom Holding, the Sere wind power project includes installation of turbines, associated infrastructure, roads, and transmission lines and substations.
Eskom said in April that construction of the $157 million project, which was initially slated for completion in the first quarter of 2010, had been delayed due to a lack of funding.
The utility company, which supplies 95% of South Africa's electricity needs, plans to install 50 turbines. Each will generate 2MW and will be located north of the Olifants River mouth, near the town of Koekenaap.
Completion of the Sere project would increase South Africa's installed wind power to an estimated 108MW.
Despite failing to meet its initial target of increasing wind power installed capacity to 300MW by 2012, South Africa has embraced major investor inducement policies, including a feed-in tariff. as the country positions itself in Africa's wind power market - currently dominated by Egypt, Tunisia and Morocco, which are collectively responsible for 97% of the continent's total installed wind power.
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