NBA Press Release

October 04, 2000

Save The Narmada, Save Humanity!

Jail Road, Mandleshwar,
District Khargone,
Madhya Pradesh.
Tel: 07283-33162, 07290-22464,

Hundreds of Maheshwar dam affected people capture HUDCO office at Bhopal Officials agree to visit valley to appraise Maheshwar Project

Hundreds of people affected by the Maheshwar Hydro- Electric Project captured the HUDCO (Housing and Urban development Corporation ) office in the Pariyavas Bhavan at Bhopal at 11.30a.m. in the morning and held it till the officers disclosed the status of the loan application presented by the S.Kumars . The siege of the office continued till 5.00 p.m. in the evening when the HUDCO officers gave a written undertaking that no amount on the proposed loan had been disbursed till date nor had the proposal been cleared. They also gave a written consent to the demand of the NBA that a team of senior officials visit the area and actually study the situation on the ground as part of their main appraisal process, before any further processing of the loan application.

Patlan mai, senior woman leader from Village Mardana said " Officials and investors will have to bow before the strength of the people and the truth of the issues. If the investment decisions are taken not on paper but by actually visiting the villages, the dam will never be built."

The offices in the complex were electrified as the protestors gave slogans and sang songs in the office complex all through the day. The HUDCO officials conceded that the Project promoters -the S.Kumars have not been able to give them even a list of those to be affected till date, nor have they responded to their various queries on the rehabilitation and environmental aspectes of the Project.

The HUDCO is one of the public sector financial institutions that have been approached by the S.Kumars - the Project promoters of the controversial Maheshwar Hydro- electric Project being built on the river Narmada, to invest into the Project. According to the Chairman of the HUDCO, Mr. V. Suresh who was met by the activists of the Narmada Bachao Andolan last month, HUDCO has been approached to put in money for infrastructure construction for resettlement colonies.


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 HUDCO should even consider investing in the Project. The people made it clear that in the absence of any possibility of providing cultivable land and livelihoods, any infrastructure construction to support the creation of "colonies" of affected people rendered unemployed after submergence, is only a facade of rehabilitation and unacceptable to them.

The people affected by the Maheshwar Project and their supporters all over the country challenge the HUDCO, IFCI, IDBI, LIC, GIC, Punjab Bank, SBI, Dena Bank and all other 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. They challenge them to publicly disclose the appraisal process and the conditionalities of the proposed investment. Failing this they intend to move charges against the decision making officers of squandering public investment and taking decisions on the basis of non transparent considerations that are not in public interest.

It may be noted that in the last two months delegations of affected people have met the highest officers of these institutions and briefed them about the realities on the ground and the discrepancies with what the S. Kumars and the state government have been saying. Now the people are resolved that if the institutions still go ahead with decisions to invest , they will institute a series of direct actions against these decisions as well as seek legal redressal and the fixing of personal responsibility on the officers taking these disastrous decisions by name. As the first of the contemplated direct actions , last fortnight, 400 farmers of the affected area who are also policy holders of the LIC submitted letters to the LIC threatening to withdraw their policies, totally amounting to Rs.1 crore if the LIC remained associated with this destructive Project. In the next month, the farmers plan to intensify this consumer's action on the LIC upto an amount of Rs. 30-40 crores.

It may be recalled that in the face of the determined struggle of the affected people in the last 4 years, several power utilities from the US and Germany, notably the Pac Gen, Bayernwerk and VEW Energie have withdrawn from this Project. Moreover last month, with the Siemens withdrawing its application for an export guarantee from the German government , a Rs. 530 crore tied loan to the Maheshwar Project from the private German bank- the HypoVereinsbank fell through .The project promoters are now trying to raise the investment required for this Project by patchworking funds from several public sector financial and infrastructure institutions.

It is clear that the basis of the investment decision of the FI's to pump money into this dying Project is not sound economics or the protection of the interests of the investors of these financial institutions but represents the worst kind of subservience of public institutions and public money to political decisions. It is a betrayal of the confidence of the investors.

The Maheshwar project that will affect the lives, lands and livelihoods of more than 40,0000 people of the area has been severely criticised 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 no cultivable land for the rehabilitation of the affected people 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.

The German Development Ministry report of June, 2000 only confirms once again the 1999 report of the joint team of the Central Environment Ministry, 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, that in the absence of cultivable land and other resources for rehabilitation, the Project cannot continue without serious legal and human rights violations on the rehabilitation front. The financial institutions will have to take cognizance of these governmental and international reports.

On the financial front, the CRISIL reports of June 1998 and October 1999 have pointed out that a bankrupt MPEB - the monopoly buyer of power from this Project for the next 35 years is in no position to pay for the expensive power to be produced by this Project. In fact, the latest draft report of CRISIL of October 1999 submitted to the Supreme Court by the Madhya Pradesh Government has pointed out that deficits in cash flows of the MPEB will increase with addition of IPP capacity and that MPEB will not be in a position to service IPP payments unless it takes recourse to increase of tariff in the domestic and agricultural sectors and the closure of welfare schemes like single point connections to the poor.

The Maheshwar Project will produce electricity that will be prohibitively expensive. This expensive power will stop thousands of agricultural pumps and pauperise 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.

In these circumstances ,once again, the Narmada Bachao Andolan calls upon the financial institutions to either prove that the Project is financially viable and will help provide cheap and reliable power to the common people of this country and that the rehabilitation of the affected people according to the required norms is possible, or to withdraw from this Project.

Alok Agarwal, Kalabai Patidar, Mangat Verma, Janpad Upadhyaksh,
Village Lepa