| NBA Press Release
|| 31 May 2006
Public protest and fast by Maheshwar dam oustees in Mumbai
NARMADA BACHAO ANDOLAN
Jail Road, Mandleshwar
District Khargone, Madhya Pradesh
NO PUBLIC MONEY OF FIs OR PUBLIC ISSUE IN MAHESHWAR PROJECT
Around 1000 women and men affected by the Maheshwar Hydel Project being built in the Narmada valley demonstrated at Churchgate in Mumbai on the 29th of May 2006. On the 30th of May they helld a one day fast on at Azad Maidan appealing to the LIC, GIC and IDBI not to contribute equity into the Maheshwar Hydel Project and to the RBI to institute a CBI enquiry into the financial irregularities related to the Project, and its promoters. Delegations of activists and affected village leaders held meetings with the senior management of the LIC, GIC and IDBI and requested them not to finance this destructive Project. On the 1st of June, the NBA activists met senior SEBI officials and requested them not to permit any public issue by the Shree Maheshwar Hydel Power Project promoted by the S. Kumars group in light of the ongoing criminal proceedings against the Promoters by the Economic Offences Wing of the Government of Madhya Pradesh on charges of criminal conspiracy, cheating and fraud.
It may be noted that the work on the Maheshwar dam has been resumed after a gap of 5 years and the SMHPCL is trying to tie up the finances for the Project and achieve financial closure in the coming months. They have asked the IDBI, LIC and GIC to pick up Rs. 90 crores equity in the Project. BHEL has been separately asked to pick up Rs. 70 crores equity in the Project. The IFCI has also been asked to convert their front-end fees still unpaid by the Company into Rs. 19.5 crores equity. The Promoters are also obtaining loans amounting to Rs. 250 crores from the REC (Rural Electrification Corporation), Rs. 259 crores from HUDCO and Rs. 700 crores from the PFC (Power Finance Corporation). It is also reliably learnt that the Company is planning a Rs. 700 crores public issue in the near future and has approached underwriters for this purpose.
Delegations of NBA activists and the affected villagers who met the LIC, GIC and IDBI officials told them that the Maheshwar Project is deeply flawed on financial, social and technical counts. They pointed out that no public money could be given to the Project in the light of RBI rules because of the pending criminal charges against the S.Kumars Directors Shri Mukul Kasliwal, Shri Vikas Kasliwal, Shri SN Modak and Shri Dalal with regard to the ICD scam in Madhya Pradesh wherein erstwhile Managing Directors and officials of the Madhya Pradesh State Industrial Development Corporation colluded with the management of 42 companies to disburse Rs. 380 crores of loans to 42 defaulting companies without obtaining proper security, proper appraisal and documentation and above the allowed Rs. 3 crore limit. The S. Kumars company ^÷ Induj Enertech Limited for example was given Rs. 44.75 crores although the MPSIDC was allowed to lend only up to Rs. 3 crores to any single company. Similarly another S.Kumars company ^÷ Modak Rubber and Textiles Limited was given a loan of Rs. 3.25 crores although it had a paid up capital of Rs. 9 lakhs only.
This money had been obtained by the MPSIDC from 176 Employees Provident funds, pension funds and gratuity funds and cooperative institutions and banks. Since the companies defaulted on these public monies, the money could not be returned and eventually the depositors filed cases against the MPSIDC. The State Government then obtained the legal opinion of the Advocate General of Madhya Pradesh and based on his opinion, the Economic Offences Wing of the Government of Madhya Pradesh filed cases against the management of the defaulter companies including two S.Kumars groups ^÷ Induj Enertech Limited, Modak Rubber and Textiles, several other defaulting companies and two erstwhile Managing Directors of MPSIDC on charges of 407, 420 and 120 B of the Indian Penal Code.
It may be noted that the Maheshwar Project is to be built on the Narmada river and is a privatized project that was given to the S.Kumars group in 1992. This Project, if built is slated to submerge homes and irrigated agricultural lands of over 1,00,000 farmers, fisher people and boatpeople in 61 villages in the fertile plains of the Narmada valley, scores of sand quarries, hundreds of acres of riverbed draw-down land and the richest fresh water fisheries in the Narmada valley. This project is also slated to produce extensive water-logging. It may be noted that the land ^”availability^‘ shown for this Project does not exist in reality and this has been confirmed by several Reports of the State Government, Central Government, German Development Ministry and others in the last few years. Moreover around 8000 Kewat, Kahar and Dalit families have been left out of the reckoning. It is clear that if the dam is built in the present circumstances, there is no likelihood of the lands and livelihoods of the farmers as well as the landless families ever being replaced.
The utility of this Project is also fundamentally in question. Within a decade of privatization of this project, the proposed outlay for this Project has been increased by five times from Rs. 465 crores to Rs. 2233 crores. It is now anticipated that the cost of this Project will around Rs. 4-5 per kWh. It is clear that such expensive power can be purchased neither by the State Electricity Board nor by ordinary consumers. Yet, the Power Purchase Agreement for this Project states that the Government of Madhya Pradesh will have to pay the promoters around Rs. 500 crores annually for the next 35 years whether this power can be sold or not, and whether it is even produced or not for the first seven years. Thus building this Project whose power may not even be possible to purchase would still mean putting an amount of Rs. 15,000 crores over the next 30 years in jeopardy. Moreover the Project will produce only 2 - 3 % of the total requirements of Madhya Pradesh power where as the T&D loss in the state is 42% and the MPERC (Madhya Pradesh State Electricity Regulatory Commission) had asked the MPSEB to reduce the losses up to 24% as far back as 2001. Clearly if the available power is saved, it will amount to several Maheshwars and obviate the need for such destructive and expensive projects.
It may be noted that the oustees had protested at the Ministry of Environment, REC and PFC offices in New Delhi on the 11th and 12th of May against their proposed involvement in the financing of the Project and met the senior management of REC, IFCI and HUDCO. The NBA has also asked the MOEF to revoke the environmental clearance.Alok Agrawal