NBA Press Note

November 16, 2000

Save The Narmada, Save Humanity!

Hundreds of Maheshwar Dam Affected People Demonstrate at IFCI, Delhi;
IFCI Officials Agree to Visit Narmada Valley on 5th, 6th, and 7th January

Hundreds of people affected by the Maheshwar Hydro-Electric Project held an angry demonstration at the Central Office of the Industrial Finance Corporation of India (IFCI) at Nehru Place in Delhi today. Carrying banners proclaiming 'No IFCI endorsement for Maheshwar dam', the demonstrators drew attention to the economic and social destruction that would accompany any attempt to go through with the Maheshwar Dam. The demonstrators sang songs and gave angry slogans such as 'IFCI, hosh me aao, Narmada Ghati ko mat dubao.'

The demonstration compelled Shri Ahuja (Executive Director, IFCI) and other senior officials to come out and listen to people's issues for nearly 3 hours. When the IFCI officials sought to leave the demonstrators without hearing them out finally, people entered and occupied the central hall of the IFCI. The Chairman of the IFCI who was away at Bombay spoke to the people's representative telephonically and confirmed that an IFCI team would visit the Narmada valley between 5-7th January,2001 before taking any final decision to disburse funds to the Project. The villagers expressed their outrage that the IFCI had prepared an appraisal report endorsing the Maheshwar Project when the Project promoters do not even have the statutorily required environmental clearance and techno-economic clearance at the proposed investment of Rs.2254 crores .

Addressing the dharna at IFCI, leader of the Maheshwar struggle, Shri Alok Agarwal said that the IFCI is the lead agency in the public financing component of the privatized Maheshwar Project. He said that in the last three years, the strong struggle on the ground and the non viability of the Maheshwar Project had forced out the US power utility PacGen in 1998 and the German power utilities Bayernwerk AG and VEW Energie in 1999, as well as led to the stoppage of the private German HypoVereinsbank tied loan of Rs.570 crores to the Project. The project promoters and the government were now looking to patchwork funds for the dying Maheshwar Project with public money from financial institutions, including the IFCI, IDBI, HUDCO, LIC, GIC, SBI, Punjab Bank, and Dena Bank. Nearly 1700 crores of the 2254 crores Project is now being sought to be funded with public financial institution money, but the main owners and beneficiaries would be the US company Ogden and the Indian promoters S.Kumars who would receive 16% guaranteed rate of return of equity whether electricity is produced or not.

He pointed out that the private promoters would receive guaranteed profits while public money would cover all risks and the people and the environment would face the adverse impacts. It may be recalled that when the Maheshwar Project was with the government, the Project cost was Rs.465 crores. This was increased to Rs.2254 crores after privatization and handing over of the Project to the S.Kumars.

Urmila Patidar of Village Pathrad also addressed the dharna .She said that the Maheshwar Project will produce electricity that will be prohibitively expensive. This expensive power which will range from Rs.12-15 per kWh at point of consumption will lead to the stoppage of thousands of agricultural pumps and pauperize the peasantry in the state, bring darkness into the homes of thousands of common people who cannot afford this power, drive power loom workers to the brink of suicide, and cause small industries to close down. This is a Project only of loot, she said ,challenging the Project promoters S.Kumars and the Indian financial institutions to prove that this is a public purpose Project or that the power can be bought by the common people. Yet the lives and livelihoods of 40-,000 people ,hundreds of acres of irrigated and fertile lands, sand quarries, fishing, draw-down agriculture and a rich,composite culture will be unnecessarily submerged.

The people of the Narmada valley expressed their complete outrage that in the light of the fact that this Project will produce prohibitively expensive electricity and that no cultivable lands for the rehabilitation of the affected people exists, the IFCI as the lead agency for financing of the Project has recommended to the other FI's that the Project merits support. The people made it clear that in the absence of any possibility of providing cultivable land and livelihoods, the resettlement will only be a farce and is unacceptable to them.

It may be noted that the IFCI is the financial institution with the largest proportion of non-performing assets. It is a certainty that the Maheshwar Project will add to the non-performing assets of the IFCI mainly due to the fact that appraisal of its financial viability and due diligence have been inadequately performed. Resettlement and rehabilitation of around 40,000 project-affected people has not been looked into at all and the IFCI has never even visited the valley till date or sought to consult the project-affected people.

It is significant to note that the Maheshwar Project has been severely criticized in several international as well as Government reports. As recently as June 2000, a report commissioned by the Development Ministry of the German government sharply indicted the Project. The German government report notes the most flagrant and open violations of the rehabilitation policy of the Madhya Pradesh government as well as the statutory clearances of the Central Ministry of Environment and Forests. It concludes that there is cultivable land necessary for the rehabilitation of the affected people is not available in sufficient quantity even by the admission of the Government of Madhya Pradesh itself, and that "if the R&R policy were executed as provided, the additional cost to the project would require an entirely new financing package several times larger than currently provided for R&R." Thus, if full and fair rehabilitation of the affected people is to be done, the Project becomes socially and financially unviable.

This report confirms the earlier reports of the joint team of the Ministry of Environment and Forests and the Ministry of Rural Development and Water Resources, as well as the 1998 report of the Task Force Committee constituted by the Madhya Pradesh state government. The people affected by the Maheshwar Project and their supporters all over the country challenge the financial institutions that are considering investment in the Project, to establish that this Project is in public interest, financially viable and that the rehabilitation of the affected people and the land based restoration of the livelihoods of the affected people is possible. Failing this they intend to move charges against the decision-making officers for squandering public investment and for taking significant decisions with no input from or concern for their investors or the Project-affected people. It is clear that the pressure of the Central and state governments on the FI's to pump money into this dying Project is not sound economics but represents the worst kind of subservience by public institutions and public money to political decisions.

Mangat Verma
Chittaroopa Palit