Narmada Samachar: 13 February 2002

   Finding that the work of resettling 2,900 Madhya Pradesh oustee
   families by February-end for taking the Narmada dam height to
   100 metres is 'rather complicated', hence 'unachievable', the
   Gujarat government has agreed to give one more month to the
   neighbouring state to finish the job. 
   ...

   The Narmada Bachao Andolan (NBA)today ended its indefinite sit-in
   outside the Union Ministry of Social Justice and Empowerment here
   today.  The protest ended after the Minister, Satyanarayan Jatiya,
   reached the protest site and informed the activists that the
   Rehabilitation and Resettlement (R&R) Sub-Group had not given any
   permission for further construction on the Sardar Sarovar dam.
   His Ministry would not allow any injustice to the project-affected
   families.
   ...

   Activists Of the Narmada Bachao Andolan (NBA) staged a dharna
   on Thursday outside the main entrance of Shastri Bhawan, which
   houses some of the important ministries including the Ministry
   of Social Justice and Empowerment, demanding that further
   construction on Sardar Sarovar dam be stopped immediately. 

   The activists, led by NBA leader Medha Patkar and Booker prize
   winner Arundhati Roy, alleged that the order of the Supreme Court
   on the rehabilitation of the dam oustees was not being implemented.
   ...

   All the bottlenecks for raising the height of the Narmada dam
   to 100 metres have been removed by successful intervention of
   Prime Minister Atal Behari Vajpayee at a high level meeting attended
   by the chief ministers of Madhya Pradesh and Gujarat. Following
   the prime minister's intervention, MP Chief Minister Digvijay Singh
   assured to withdraw the case from the Supreme Court pertaining
   to the height of the dam.
   ...

   The Supreme Court on Tuesday reserved its verdict on the question
   whether Booker Prize winner Arundhati Roy has committed contempt
   of court and fixed March six for the pronouncement.

   A Bench comprising Justice G B Pattanaik and Justice R P Sethi
   rejected an application by Roy for transfer of the case to another
   bench and reserved its judgement after hearing her counsel
   Shanti Bhushan and amicus curiae Altaf Ahmed.
   ...

   ...
   If you really want to impress upon the public that you will
   not tolerate contempt of court, then simply compile a list of
   all the judgements that you have issued which have been routinely
   disregarded, and ask for an accounting on each. For example, you
   could ask why the airwaves, which you declared to be public
   property two Lok Sabhas ago, are still controlled by the government.
   You could ask why the tribal lands which you declared to be the
   inseparable property of our nation's indigenous people, are being
   removed from their possession. And while you're at it, you could
   also ask various governments to determine why it is that those
   you have identified as successfully rehabilitated are standing
   in chest-deep water around their flooding homes! 
   ...

   RECENT YEARS have seen a welcome emphasis on watershed
   programmes as a cornerstone of rural development in India. In
   our work "India's Drylands", my colleagues and I have shown
   that spending a mere 1 per cent of the national income on
   watershed and micro-irrigation development programmes can
   lead to both employment guarantee and food security in rural India.

   SANJAY GUBBI throws light on a tribal resettlement programme that
   has shown how voluntary resettlement of tribals delivers the twin
   benefits of social justice as well as consolidating prime wildlife
   habitat

   Was the World Commission on Dams (WCD) a watershed in global governance? 

   Three NGOs - the Lokayan, the American World Resources Institute
   and the Tansanian Lawyers Environmental Action Team - think so in
   their independent assessment. According to their report, the WCD
   marked a departure from previous global commissions. The report says
   that because of its origins in the international organising of
   dam-affected people and their supporters, the commission included
   representatives of project-affected communities. Commissioners
   came from all points on the political spectrum who, for the most part,
   were active practitioners in international networks rather than
   the eminent persons.
   ...

One would have thought that the collapse of Enron, the crown jewel of the
privatisation programme in the power sector, would have held some lessons
for everyone concerned. Instead, projects like the privatised Maheshwar
Power Project show how the tragedy is being compounded and exactly what is
fuelling the privatisation of the power sector.

Maheshwar illustrates how privatisation is just a process of
?briberisation?, the euphemism coined by this year?s Nobel laureate for
Economics, Joseph Stiglitz. No one can understand this better than him. He
was the chairman of Clinton?s Council of Economic Advisors, and also the
chief economist for the World Bank till he had to quit in disgust after he
saw how the WB/IMF-led structural adjustment programme had ruined the
economies of the third world countries.

Maheshwar is one of the large dams proposed to be built on the Narmada
river. It is a hydel project with a projected capacity of 400 MW. It will
submerge the lands and homes of 61 villages and it has been estimated to
affect over 50,000 persons. It was privatised and handed over to the S.
Kumars (of shirting/suiting fame) in 1994. Though the project had received
conditional environmental clearance many years ago, every independent
appraisal made shows that almost every one of the conditions of clearance
has been violated.

In the last four years, the project has been appraised by a team of the
ministry of environment, rural development and water resources, by a task
force of experts constituted by the Madhya Pradesh government, by the Tata
Institute of Social Sciences, and lastly, by a team of international
experts constituted by the development ministry of the German government.

Each of these independent expert bodies found that there was no land and
no plan for the rehabilitation of the project- affected people, and that
even basic and preliminary studies have not been done to assess the social
and environmental impacts of the project. Clearly, for the promoters of
the project as well as for much of the ruling establishment, the people,
being mostly poor Dalits and tribals, are expendable. These projects are
viewed only in terms of financial cash flows and profitability.

However, an analysis of these cold- blooded cash flows reveals that these
projects are fundamentally flawed and will eventually implode like Enron.
In 1994, before its privatisation, the cost of the Maheshwar project was
estimated at Rs 465 crore. After privatisation, its estimated cost has
increased almost five-fold to Rs 2,231 crore as of today. According to its
project report, because of the seasonal availability of water, it will
generate power at an average plant load factor of less than 25 per cent,
out of which 80 per cent will be produced during the monsoon months when
power will not be needed.

During the non-monsoon months, the project will generate power for only
one and a half hours a day! The average cost of power from the project
will exceed Rs 6 per unit at the dam site. Maheshwar power, during the
period when it may be needed, will cost well over Rs 10 per unit.
Remember, the Maharashtra State Electricity Board was unable to sell Enron
power to neighbouring states for even Rs 3 per unit.

None of this has deterred the Madhya Pradesh Electricity Board from
signing a power purchase agreement to purchase all the electricity from
this project at this price. The board has even agreed to provide an escrow
cover to the project under which the payments to the S. Kumars will have
priority over all other payments (such as NTPC which is supplying power at
1/4th of the cost, and even the MPSEB?s workers salaries). Even the assets
of the board would stand mortgaged to the company.

In the last four years, there has been a procession of foreign
collaborators for this project who have come and gone, after the financial
and social unviability of the project has been brought home to them by the
relentless campaign of the Narmada Bachao Andolan. They include the US
construction major Bechtel, the US power utility PacGen, the German power
utilities, VEW Energie & Bayernwerk, and finally, another US power
utility, Ogden. In fact, even the proposed equipment suppliers, Siemens
and ABB, had to bow out because of the refusal of the German and
Portuguese governments to provide the necessary guarantees.

The result of all this was that out of the total estimated Rs 2,231 crore
cost of the project, the total private investment came to be limited to S.
Kumars equity of Rs 136 crore (about 6 per cent of the cost of the
project). Normally, a project like this would be abandoned by the public
and the private sector for cold-blooded financial reasons. Amazingly,
though almost no work has been done on the project, the S. Kumars claim to
have already spent around Rs 500 crore on the project.

Not surprisingly, most of these funds have been drawn from Indian
financial institutions such as IFCI and PFC. Though the project does not
have the statutory Central Electricity Authority clearance for the
escalated cost of Rs 2,231 crore; though the lending of more than 90 per
cent of the funds to a privatised power project violates the norms of
lending of public financial institutions; though this defeats the object
of privatisation of the project which was to use private funds for the
project; though the S. Kumars have yet to pay the MP government and the
NVDA more than Rs 50 crore spent by the authorities on the project, even
seven years after it was privatised (as noted by the CAG in the reports);
though IFCI?s own project appraisal implicates the S. Kumars for siphoning
out money borrowed from financial institutions for the project. Why then
do the financial institutions still continue to lend more money for the
project?

There are no prizes for guessing why Stiglitz characterises
?privatisation? as ?briberisation? and Advani in an earlier avatar (before
the BJP and the Shiv Sena?s spectacular turnaround on Enron), called it
?loot through liberalisation?. And Enron and Maheshwar are by no means
exceptions to the rule. They are the rules which are fundamental to the
programme of privatisation of the power sector.

Far from reducing corruption, privatisation in the power sector has
promoted corruption to a whole new realm. Far from bringing in more
private funds in the sector, it has in fact led to increased public sector
spending per MW of additional capacity. Though this may appear
paradoxical, it is fundamental to the whole process.

The power sector by its nature must have monopolistic suppliers and public
regulators. In a country where a large section of public authorities are
corrupt, if you introduce private players whose only goal is to maximise
profit, you are increasing the scope and incentive for corruption. This is
because the easiest way for a private player to increase his profits is to
corrupt the public institutions which are supposed to regulate, finance
and adjudicate. Privatisation of the power sector, therefore, is an
alliance between the power brokers in the government and the business
elite who profit at the expense of the consumers and the public exchequer.

The fact is that infrastructure sectors like power, telecom, roads and oil
are not structured to perform fairly or justly in a free market. Being
natural monopolies or oligopolies, they need regulation. If you are
privatising because the government and the public sector are corrupt, then
the chances are that much of the regulatory and watchdog institutions will
also be corrupt. Unfortunately, there are no shortcuts here to deal with
corruption. The only way forward, however hard, is to improve the
accountability of public institutions including the public sector.

Almost every third world country which has gone through the structural
adjustment programme has had this experience. Notice how fast even the
mighty Soviet economy collapsed after it was opened up to multinational
private companies. True, the Soviet economy was in bad shape and there was
considerable corruption even before perestroika. But the entry of private
multinationals in the country led to a quantum jump in corruption which
quickly destroyed whatever was left of the economy.

The privatisation of the infrastructure sector will destroy the public
financial system and the economy of the country. However, it will greatly
benefit, in the short run, the big private players and those who control
the institutions of the ruling establishment. It is they who share in the
loot and plunder of public funds and resources.

It is not surprising that they and the mainstream press they control
continue to extol the virtues of the privatisation programme. More
reforms, more projects like Maheshwar, spell for India a future like that
of Argentina?s.

(The writer is a Senior Public Interest Lawyer in the Supreme Court