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A dam and some questions

Frontline Volume 17 - Issue 02, Jan. 22 - Feb. 04, 2000
India's National Magazine on indiaserver.com
from the publishers of THE HINDU



Table of Contents

MAHESWAR DAM

A dam and some questions

The sustained popular opposition to the Maheshwar dam, one of 30 large dams being built across the Narmada, raises fundamental questions about the human, ecological and financial costs of the project.

SUDHA MAHALINGAM
in Maheshwar

ON January 11, hundreds of villagers from Khargone district in Madhya Pradesh and activists of the Narmada Bachao Andolan, led by writer and social activist Arundhati Roy, were arrested while staging a peaceful protest at the site of the Maheshwar dam, being built across the Narmada.

The villagers and activists were protesting against the Maheshwar hydel project, which is being implemented at a huge financial, ecological and human cost. The agitation was organised by the NBA, the voluntary organisation that is spearheading a movement against large dams. The NBA had demanded that work on the Maheshwar dam be stopped until the project's cost-benefit analysis is reworked and its economic viability is established and the project authorities proved that cultivable land was available for rehabilitating the displaced people.

The Government imposed prohibitory orders at the project site, but the protestors, numbering about 400, formed small groups and regrouped at the pit head of the dam, close to Jalud village in Khargone district. There they sat on a dharna until the aftern oon of January 11, when they were arrested under Section 188 of the Indian Penal Code for violation of prohibitory orders.

The first private sector hydroelectric project in the country, it will produce 400 MW of peaking power. The Maheshwar Dam is one of 30 large dams envisaged under the controversial Narmada Valley Development Project. Conceived in 1975, the Maheshwar proje ct was initially to be undertaken by the Narmada Valley Development Authority (NVDA) but was handed over to the Madhya Pradesh Electricity Board (MPEB) in 1989. In 1996, the State Government signed a Memorandum of Understanding with S.Kumars, a corporate group with interests in textiles. Under the terms of the MoU, S.Kumars will undertake the construction, commissioning, operation and maintenance work. S.Kumars will hold 33 per cent of the equity in Shri Maheshwar Hydro-Electric Corporation Limited (SMH EC); the rest was to be offered to foreign multinationals.

The dam will have a full reservoir level (FRL) of 162.5 m, and a maximum water level of 165.8 m. It will have no irrigation potential, and the power produced is expected to meet the peaking demand of Rajghar, the constituency of Chief Minister Digvijay S ingh.

When completed, the project will lead to the submergence of vast tracts of fertile, irrigated agricultural lands in 61 villages, hundreds of sand and stone quarries and sites of cultural and archaeological importance and uproot about 5,000 families of fa rmers, fisherpeople and others dependent on the river for their livelihood.

THERE is a growing movement against large dams because, among other things, they cause large-scale displacement of local populations whereas the benefits accrue to an entirely different set of people - one that lives mostly in urban areas and seldom bear s any part of the cost. The environmental, legal and social opposition to the Sardar Sarovar Dam, also on the Narmada, which has displaced large numbers of tribal people, has been well-documented.

The Maheshwar project has become particularly controversial because of the cavalier manner in which the people who will be displaced by it have been treated. Of the 61 villages which will be affected, 22 will be completely submerged. Frontline vis ited seven villages, six of which will be entirely submerged. In village after village it was the same story. For years, neither the district administration nor the project promoters informed the villagers about the construction of the dam. Officials who came to survey the villages misled the villagers into believing that the survey was being conducted for other purposes. When blasting began two years ago, the villagers, alarmed by the cracks appearing in their concrete houses, made enquiries, but their queries were stonewalled.

Eventually, the villagers learnt about the dam from NBA activists. In order to raise awareness about the problems of project-affected people, NBA activists took the villagers to Bargi, 1,120 km upstream where another dam had been built by the NVDA. That dam had affected 162 villages, and those displaced had not been served any advance notice or paid any compensation. They are still fighting for rehabilitation and resettlement (R&R).

It took months for NBA activists to convince the villagers in the Maheshwar dam area that the markings made by project authorities in the surrounding villages indicated the level up to which the water would rise when the dam was full. The NBA, which secu red official documents and maps related to the project, confronted the project authorities. Only then did they concede that 22 villages would be fully submerged and 39 others partially affected. The authorities were then forced to take up R&R measures wh ich hitherto existed only on paper.

S.Kumars have entrusted the R&R work to the MPEB, and under the terms of the Agreement for Resettlement and Rehabilitation, the MPEB will bear the costs arising out of delays in the implementation of R&R measures. Just why the MPEB took on this responsib ility is hard to understand, since R&R is a vexatious issue. Under the original R&R schedule, villagers from Jalud, the first submergence village, were to have been resettled by 1997-98, but that has not happened to this day owing to opposition from the villagers and the difficulty in finding suitable land for their resettlement. Under the circumstances, it might take many years for the R&R to be completed, and the MPEB will bear the costs arising from this delay.

A revised R&R plan prepared in 1998 gives details of the area that will be affected by the project. According to it, 16,178 hectares of private agricultural land and 7,169 ha of government land will be affected. Of these, 873 ha of private land and 4,637 ha of government land will be fully submerged; this estimate does not account for 3,263 ha of river-bed and nullah-bed land. According to this plan, 2,264 families need to be rehabilitated and the rest resettled.

However, the NBA contests the MPEB's figures in respect of the number of project-affected families. Chittaroopa Palit of the NBA told Frontline that the number of such families was not 4,000 as the MPEB claimed but twice as many.

Under the R&R policy, as compensation for submerged land, dispossessed villagers are entitled to land of comparable quality. In all, 1,457 ha will be required for rehabilitation of the affected families - 286 ha for abadi sites (sites for human settlemen ts) and 1,171 ha for cultivation.

R&R work in the 61 villages that will be affected will be taken up in three phases; work on the first phase, which will cover the villages that will be fully submerged, was to start in 1997-98. However, in the six villages that Frontline visited, villagers had not received any offer of alternative farmland.

Mahadev Patidhar, a farmer of Sulgaon village, said: "I have not been informed that my land will be submerged, nor have I been shown any land. I am told that they are offering a cash compensation of Rs.80,000 an acre. I grow three crops a year on my land and earn up to Rs.50,000 a year from one acre. Why should I accept the offer? I want land in lieu of land - as fertile as the one I have now."

VIVEK BENDRE
At the Maheshwar dam site in
Madhya Pradesh, a protest demonstration on January 11 by activists of the Narmada Bachao Andolan and those who will be displaced by the project.

Patidhar, like most others in his village is a prosperous farmer: he lives in a concrete house equipped with all the accoutrements of rural affluence - a telephone connection, a television, a motorbike and running water.

The story is similar in the other villages that this correspondent visited, including Pattharad, Behegaon, Mardana and Lepa. Villagers here grow wheat, sugarcane, cotton and spices and produce three crops a year.

THE people of Jalud are to be resettled in Samraj ki Bedi village - which is no more than a barren hillock with a rocky surface. A six-inch layer of soil dredged from a nearby pond had been spread on the rocks to make the land appear arable. Even if this soil layer is not washed away during the next monsoon, it would be impossible to grow any crop here. This has been confirmed by a Task Force that was sent by the Union Ministry for Environment & Forests following a representation by the NBA. The Task Fo rce comprised three central representatives - an Assistant Commissioner in the Department of Rural Development, the Director of the Central Water Commission and an Additional Director of the Ministry of Environment & Forests - who visited the site in Oct ober 1998. The report of the Task Force observed that Samraj ki Bedi was "a stony and barren hillock on which agriculture was impossible" and even the attempt to spread topsoil on the rocky surface would not transform the barren land into a cultivable pa tch. Villagers enraged by the dam authorities' attempt to hoodwink them have vowed never to move out of their land.

However, Col. Ravi Batra, a representative of S.Kumars at the project site, told Frontline that the Samraj ki Bedi site was an experimental farm intended to prove that crops could be grown even on a rocky surface. It was part of the site identifie d for the resettlement of Jalud villagers. It is another story that this "farm" has come up on common land that had been used for grazing and land grabbed from adivasis and others. The original inhabitants, who had been eking out a meagre living and have now been reduced to penury, said that they had been forcibly evicted from the land.

R&R work in respect of the other submergence villages has not even begun. Villagers say that there are no arable lands available for resettlement. The area being very fertile, every stretch of arable land is being farmed and few are willing to sell their land. A few oustees - principally those whose lands get submerged every year during the monsoons even now - have accepted cash in lieu of land, but most are unwilling to do so. Many of those who accepted the cash compensation have squandered it and now work as landless labourers.

Since there is no private land available in the region, the project authorities have offered government lands in some areas. NBA activists, however, told Frontline that in many cases even the government lands were those that would be submerged. In other cases, they comprised the village common land on which villagers have grazing rights. "Every village is entitled to have 7.5 per cent of its total land as charnoi (common land). If they take it away, where do we graze our cattle?" ask the v illagers.

Col. Batra told Frontline that of the 873 ha private land required for resettlement, S.Kumars had acquired 115 ha and had identified an additional 241 ha for which it had paid 50 per cent of the cost. He further claimed that the company had paid a compensation of Rs.1.30 lakhs per acre of irrigated land and Rs.90,000 per acre of barren land to those who settled for cash compensation. However, he would not proffer details of the land purchased by the company for resettlement.

Jalud villagers dismiss the project promoter's claims. Jalud Upa Sarpanch Ramesh Senger said: "We have not been shown any acceptable farmland. Nobody is willing to take the rocky land at Samraj ki Bedi. A handful of our villagers have accepted cash compe nsation - 29 persons of Jalud village have accepted Rs.11,000 each to build houses on the residential sites allotted to them. The rest are determined not to go."

In every village that Frontline visited, the villagers came out in their hundreds shouting slogans against the dam and expressing their resolve to drown in the Narmada rather than move out.

Col. Batra claimed that Dalits and other people who rank low in the caste hierarchy were in favour of the dam and that many of them had expressed their support to him. He then insinuated that the NBA, rich with foreign funds, had paid huge sums of money to upper-caste villagers to induce them to spurn the offer of the project promoters. "My gut feeling," he said, "is that they have been given huge sums of money by the NBA. Otherwise how could these villagers have television, telephone and all those luxu ries?" Asked why he had not scrutinised the NBA's accounts, which were open to public scrutiny, Col. Batra did not offer an answer.

The R&R package, such as it is, covers only villagers who own land; landless labourers and those who eke out their livelihood from other activities have been totally left out. Dalits, kevats and kahars in the seven villages visited by this correspondent expressed their opposition to the project. Kevats and kahars depend on fishing, boating and sand extraction for their livelihood. People like them have not been factored in while working out the cost-benefit analysis of the project.

The Paschim Nimad area, in which all the submergence villages lie, is the largest and richest inland fishery catchment area in the Narmada. About 900 families which depend on fishing for their livelihood stand to lose their traditional fishing rights bec ause the reservoir will become a protected area.

Further, the sands on the Narmada's banks are used for construction in nearby towns, and one can routinely see hundreds of trucks lined on the banks, with thousands of labourers quarrying sand manually and loading the trucks. Each labourer earns Rs.300 t o Rs.400 a day. The project will rob these people of their source of livelihood and offer nothing in return.

THE environmental and other costs of the project are not inconsiderable either. The intake well for water supply to Indore, situated about 5 km from the dam site, will be submerged when the dam comes up. A new well will have to be constructed, the cost o f which has not been accounted for in the cost-benefit analysis. Further, if a new well comes up in the stagnant waters of the reservoir, there is a high risk of pollution because the Kedia distillery discharges its effluents in nearby Barwah. Also, Khar gone is the largest pesticide user in Madhya Pradesh, and residues, which flow into the river, will find their way to the water source from the stagnant reservoir.

Silting could be yet another major problem. A young villager of Lepa village (which is slated for submergence), who works for the water authority in the district, says: "Everyday I measure the level of sand in the river. After the coffer dam was built, w e have had three feet of silting. At this rate, the dam will silt over in 30 years." Project authorities concede that waterlogging is likely over an area of 10,000 ha. NBA activists further claim that the entire Narmada belt is in a seismic zone.

Alok Aggarwal, an NBA office-bearer, says that project authorities have ignored the issue of livelihood of a large proportion of the local population. During the non-monsoon season, the dry riverbanks are used for cultivation of watermelons, musk melons and some seasonal vegetables. These activities will be at risk when the dam is built. "We need a comprehensive cost-benefit analysis rooted in reality before we proceed with the project," says Aggarwal.

Environmental clearance for the project was given in January 1994 by Minister for Environment Kamal Nath just days before the new environment Act came into force. The Act made it mandatory for promoters of such projects to hold a public hearing before e nvironmental clearance could be given. An earlier application for environmental clearance for the Maheshwar project was rejected in 1986 since the authorities did not submit an environmental management plan. The 1994 clearance was conditional on, among o ther things, the R&R of the project-affected people being completed by 1997-98. The NBA's demand for the revocation of the environmental clearance following the promoters' failure to fulfil their obligations has gone unheeded.

The NBA has organised several rallies to mobilise public opinion against the project. During May-July 1998, villagers blocked all roads to the dam site and prevented the movement of building materials. Work on the dam has come to a standstill although wo rk on the power house is in progress.

The women of the villages have been in the forefront of the agitation against the dam. Hundreds of women told Frontline that in April 1998 they were roughed up by mounted police, a fact that was corroborated by the findings of the National Commiss ion on Women. Many demonstrators were arrested and jailed. During the Rally for the Valley organised by the NBA in July 1999, Patharad was one of the villages where the rallyists held demonstrations. In November 1999, a massive rally was organised at Raj ghat in Delhi, in which Arundhati Roy participated. The rallyists submitted a petition to the German Ambassador seeking his intervention in stopping German funding for the project.

THE Maheshwar project comes at a steep financial cost. The Detailed Project Report of 1988 submitted by the NVDA had envisaged a project cost of Rs.465 crores. By December 1996, the figure had shot up to Rs.1,569 crores at a dollar exchange rate of Rs.37 . The latest estimates put the project cost at Rs.2,187 crores. However, even at such costs, peaking power is likely to be available only for four months a year, and that too during the monsoons, although demand is maximum during the non-monsoon period. PRAYAS Energy Group, a Pune-based organisation, has estimated that the plant will produce firm energy of 716 million units at 90 per cent dependable year whereas, according to Crisil Advisory Services, the dependable year is only 50 per cent (six months) . Yet the project sponsors are to be paid for deemed generation at 90 per cent. The project quotes an official 'levelised' tariff of Rs.1.80 per KW hr while PRAYAS estimates that the 'levelised' tariff at 2001-2 prices will be Rs.5.24 per KW hr at the bu sbar. These computations were made on earlier cost projections cleared by the Central Electricity Authority. The NBA estimates that at the current project cost of Rs.2,187 crores, the price of power is likely to be Rs.7.82 per KW hr. Since new lines will have to be put up, the cost of transmission will also have to be included.

Under the circumstances, it is abundantly clear that the Maheshwar project will produce expensive peaking power. With the setting up of a power regulator in Madhya Pradesh, the interests of the consumers would be best served if the State Government abdic ates its role in finalising the price of power to be paid by the consumers over a 35-year time-frame. Economic issues involved in contracting power are best sorted out in such a forum since its findings would require to be implemented.

For example, with Enron on steam, Maharashtra would be power-surplus and since Maheshwar area is in western Madhya Pradesh, will it not make sense to buy power from Maharashtra to meet peaking demand?

Initially, S.Kumars had proposed to contribute only 33 per cent of the equity in Shri Maheshwar Hydel Power Corporation Limited; two German multinationals, Siemens and VEW Energie and Bayernwerk, were to contribute the rest. However, in the wake of popul ar opposition to the dam, the German firms decided to pull out in April 1999. Two United States-based firms, Bechtel Enterprises and Pacgen, had also pulled out for the same reasons. However, subsequently, a German bank, Hypo Vereinsbank, agreed to exten d a loan for the project provided a guarantee was obtained from Hermes. Whether it will still go through with the proposal in the face of opposition from the NBA and the villagers is doubtful.

The withdrawal of foreign promoters has been a big blow to S.Kumars which has approached the Securities Exchange Board of India in connection with a planned public issue. There are reports that another U.S. power company is examining the possibility of a cquiring an equity stake in the project. The promoters are also believed to have approached the State Government for equity participation, and according to informed sources in the NBA, the Government has consented.

The project was to achieve financial closure in 1997, but is nowhere close to it. According to original estimates, 76 per cent of the project financing was to come from foreign sources. Local loans from Indian financial institutions accounted for Rs.300 crores. SBI-Frankfurt and the Power Finance Corporation were to give foreign currency loans of around Rs.296 crores. In addition, the State Bank of India (SBI) was to stand guarantee for the Rs.524-crore loan from Hypo Vereinsbank while the Industrial Fi nance Corporation of India (IFCI) was to back the Rs.182.81-crore loan from Portugal. It is learnt that the promoters are now approaching other financial institutions and infrastructure financing institutions for fresh loans.

NBA activists point out that the participation of Independent Power Producers was sought only to attract foreign funds. However, if, as is being contemplated, the Maheshwar project were to be sustained largely by Indian public funds routed through FIs as loans, as well as foreign loans guaranteed once again by Indian FIs, and through equity participation by the State Government with the promoters themselves financing only a fraction of the total cost through equity, why should the project be guaranteed attractive terms - such as 16 per cent return on equity, escrow cover, payment for "deemed generation" and so on - for a project whose cost has quadrupled over 10 years.

Against this backdrop, the MPEB's ability to pay for this power is suspect. According to the Crisil Advisory Service's report submitted by the State Government to the Supreme Court, the MPEB has negative cash flows and is in no position to give escrow co ver for the Maheshwar project, unless all single-point connections that are currently extended to the economically weaker sections are terminated and the present irrigation subsidy is drastically pruned. The report further says that the MPEB will be able to make annual payments to the Maheshwar project only if it takes substantial external loans in the coming years. Yet, the MPEB has stated in the apex court that it would be in a position to extend escrow cover to the Maheshwar project.

With the government contracting a loan from the Asian Development Bank (ADB) for the restructuring of the sector, the regulator's role gains signifcance. The manner in which the State Government has dealt with the power sector in recent years shows that the consumer's interests are at an enormous discount as are the scientific and economic rationale.


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