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Siemens under scrutiny over power project

By Manik Mehta

FRANKFURT: A hydro-electric project in Maheshwar in the Narmada Valley, in which German multinational Siemens is involved, faces extensive scrutiny following allegations that the company had not conformed to guidelines set by the German government for providing guarantees.

An independent German organisation, Urgewald, which monitors progress of developing nations, has alleged that Siemens wilfully gave wrong information in its application for official German guarantees and had thus violated the guidelines of the Hermes export credit insurance. It has asked the German government to reject Siemens' plea for a guarantee.

Urgewald also claimed that the protests at the site of the dam, which allegedly threatened the existence of 40,000 peasants faced with eviction from their dwellings around the site, had once again flared up.

Siemens will be supplying components valued at $175 million for the planned power station. The German multinational, which has business interests ranging from the energy sector to telecommunications, is keen to tap India's "colossal energy demand".

Urgewald alleged that Siemens had the turbines and generators for the project manufactured in Russia. As a result, a "substantial part of the supplies to be made" were not of German origin, a condition for the Hermes guarantee, an Urgewald spokeswoman said.

The Hermes guidelines state that "export guarantees can be undertaken only if the services (including parts, components or products) are largely of domestic (German) origin". Foreign supplies can "make up a share of 10 per cent."

Wolfgang Breyer, Siemens' spokesman, dismissed the allegations. He, however, confirmed that large parts of 10 turbines and generators meant for the Maheshwar project are to be manufactured by companies in St Petersburg, Russia. Siemens has minority stake in the Russian companies LMZ and Elektrosila which manufacture generators and turbines.

Supplies of non-German origin would account for at the most a quarter of the total supplies envisaged under the entire contract, which will also include transformers, switch systems and engineering services, Breyer said. He pointed out that the non-German component was necessary because Siemens would otherwise not be able to compete against international bidders, given the extremely high cost of production in Germany.

In 1997, the German government signalled its agreement to provide a tentative coverage for the Siemens project, but final approval for the guarantee has not been issued. Berlin-based government sources said on condition of anonymity that there had been wrangling between two different ministries represented in an inter- ministerial committee set up to clear the project. The economic ministry supports the Hermes guarantees whereas the ministry for economic cooperation, which oversees aid to developing countries, is against it, they said. The ministry for economic cooperation has taken a tough stand against India and frozen aid since the nuclear tests of 1998.

However, Urgewald said it is concerned over another aspect. Siemens has been assuring that the resettlement of 23 villages in the region is making headway and a committee comprising representatives of the local population is monitoring whether the "compensation is functioning''.

However, Urgewald alleged that "not a single Indian family" had so far been compensated with any alternative land. Repesentatives of the affected population, according to it, had also not been included in the monitoring committee. (IANS)

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