Narmada Samachar: 15 January 2001


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SSP-related news

NBA Press Releases

Sardar Sarovar Review by the Chief Ministers Conceals Ground Reality ;
NBA Press Release - Jan 11, 2001
Representatives of Narmada Valley Storm into Chief Minister's Residence;
Demands for a just and pro-people stand in the Review Committee
NBA Press Release - Jan 9, 2001
Maharashtra Govt. should not succumb to pressure by Gujarat;
No work on SSP before assessments by independent committees
NBA Press Release - Jan 8, 2001

Press Clippings

Lack of clarity on SSP irks Amarsinh ; Times of India - Jan 12
Construction plan ratified ; Hindu - Jan 11
NCA panel okays action plan for Sarovar project ; Times of India - Jan 11
Patkar held, released for barging into CM's house ; Times of India - Jan 10
NBA activists barge into Digvijay's house ; Hindu - Jan 10
NCA meet to discuss dam issue ; Hindu - Jan 10

Maheshwar-related news

NBA Press Releases

Thousands celebrate withdrawal of US power utility from Maheshwar Project,
protest indiscriminate globalisation and privatization
NBA Press Release - Jan 7, 2001

Press Clippings

NBA holds rally against Maheshwar project ; Hindu - Jan 9

Other relevant Press Clippings

The truth behind government platitudes ; Ravi Kuchimanchi; - Jan 11
New victories for dam evictees ; Gail Omvedt; Hindu - Jan 11
Supreme Court Constructs a Dam ; Shiv Visvanathan, ; Economic and Political Weekly - Nov 25-Dec 1, 2000
Managing water the Gangotree way ; Times of India - Jan 12
Rs 106-cr Saurashtra Pipeline project completed ; Economic Times - Jan 12
Water everywhere, but not a drop to drink ; Hindustan Times - Jan 11
Lack of water policy haunts Gujarat ; Hindustan Times - Jan 10
NBA activists question expensive irrigation projects ; Times of India - Jan 8

Recent Additions to the web-site

Overhaul of the alternatives section: ;
- Added a document about Jeevanshalas (schools being run by the NBA in
   the Narmada Valley)
- Added other NBA documents that present alternatives.
Added page on debate on Ram Guha's article in The Hindu and responses. ;

Feature Article: A bubble called Enron - Shripad Dharmadhikary

Hindustan Times - Jan 9, 2001

(Shripad Dharmadhikary is an activist with the NBA)
ENRON IS in the news again. The current mess that the Government of
Maharashtra finds itself in with Enron is at once farcical and
frightening. It is strange to see the same politicians who had
brazenly defended and pushed the deal with Enron now squirming,
calling for its renegotiation, and saying that the state Government
just cannot pay up.

The Dabhol Power Project, popularly known as the Enron project, with
its Phase I of 728 MW, makes an interesting case of how globalisation
in a developing country can be replete with dark ironies. This is one
of the nine "fast track" power projects which were initiated in 1991
with the opening of the power sector to private companies. These nine,
launched with much fanfare, were expected to herald the era of
privatised power - cheap and plenty of it. Enron promised to build
fast, and deliver power at around Rs. 2.40 per unit.

The project faced stiff opposition on many counts but principally on
the grounds that the power would be too expensive and the contract
(the Power Purchase Agreement - PPA) was loaded in favour of the
company. The BJP-Shiv Sena combine made this a major issue in the 1995
Assembly elections with Gopinath Munde's now famous proclamation: "We
will throw the Enron project in the Arabian Sea."

The BJP-Shiv Sena came to power in Maharashtra, a high level committee
was set up to study the project and this recommended scrapping of the
Enron project. A notice was given to Enron which moved for arbitration
in London. There was talk of crippling fines if the contract with
Enron was breached. A picture was painted that India would become an
outcast in the global market if it did not honour its commitments.

Against these "odds", the BJP-Shiv Sena Government "forced" Enron to
renegotiate. And triumphantly announced that the loaded contract has
been straightened out and the price of power would be Rs 1.86 per
unit.  Phase II of the project, till then optional, was also
agreed. The project came back on line, arbitration was withdrawn,
Rebecca Mark became a corporate heroine. Critics were as usual brushed
aside and branded as "anti-development" and "anti-national". The
courts cleared all the cases against Enron.

Now the bubble has burst. As Enron presented its first bills, it has
become clear that the power cost is amazingly exorbitant - Rs 7.80 per
unit at the last count. The Maharashtra Government initially put up a
brave face and pretended that there was no problem, that it can easily
buy power from Enron. But now, there have been a series of conflicting
statements. Finally, the Chief Minister has conceded that Maharashtra
just cannot afford the high cost power from Enron.

A few months back, the Maharashtra Electricity Regulatory Authority
(MERC) made an order requiring the Maharashtra State Electricity Board
(MSEB) to purchase the cheapest possible power. Since Enron's power is
the most expensive, Enron will have to be the last supplier from whom
MSEB can purchase power. The MSEB thus is not allowed to buy all the
power Enron can produce. (It is lifting currently less than 45 per
cent Plant Load Factor). But it is bound by the PPA to still pay Enron
for all the fixed charges. These are to the tune of a whopping Rs 95
crore per month - over Rs 1,000 crore a year.

The MSEB has to pay additional fuel charges for every unit of
electricity purchased. When Phase II starts, MSEB's payments in the
first year itself will be about Rs 6,000 crore. Compare this to MSEB's
total turnover today - Rs 11,000 crore.

The Maharashtra Chief Minister and other politicians are now calling
for a renegotiation of the contract. There is talk of how Maharashtra
will have to pay Enron Rs 35,000 crore if it annuls the contract. In
this din, a few things are forgotten.

The most important question is - how did this situation arise in the
first place? The fact is that the PPA was highly skewed and it
resulted in such a high price being paid for the power. It is
difficult to believe that the Maharashtra Government was not aware of
this. So why was such a loaded PPA signed?

When the Enron deal was signed, those who opposed it pointed out that
the PPA would result in extremely expensive power. (One is not
referring here to the BJP which raised the issue and changed track
after coming in power). Everything that was being said by the
protestors then is coming uncannily true.

Those who were also involved in the protests faced severe
repression. In one particularly outrageous incident, Medha Patkar and
others were brutally beaten up. Today, media commentators and even the
Government are echoing the same figures and words which Patkar had
cited at that time.

A small Pune-based energy research group, "Prayas", was the first to
do an analysis of the PPA - a brilliant piece of work. (This was
before the PPA was made public). If a group consisting of a couple of
engineers, working with a desktop PC was able to accurately predict
how much the power from Enron would cost, it is difficult to believe
that the Government with its hordes of engineers and infrastructure
found itself clueless.

Why is the Government unable to do any thing about this issue? If the
contract is so blatantly one- sided, why is the Government reduced to
a hapless entity? If the country allows one MNC to hold it by the neck
with a loaded PPA, if it cannot act to correct what is clearly against
the interests of the country, then where is the sovereignty of the
nation? These are the issues being raised by those who are questioning
the one-way blind drive towards globalisation and privatisation.

Enron is not the only power project with these implications. Since the
privatisation process began, several hundred MOUs have been signed
with private, mostly foreign companies, for building, owning and
operating power plants. In most of these cases, the PPAs are similarly

Take the example of the Maheshwar Hydel Power Project (MHEP). The
first privatised hydel power project in the country, MHEP is a 400 MW
plant being built on the Narmada river in Madhya Pradesh. The owners,
a textile company, have been looking for foreign equity partners; but
in the last several years, three companies have come in and walked
away - PacGen of the US, Bayernwerk of Germany and recently, Ogden of
the US.

The project raises all the concerns that large dams raise, as also
issues of privatisation. An intense mass struggle is going on here
since several years. Apart from displacement and ecological issues,
the key query raised by the Narmada Bachao Andolan has been regarding
the cost of power from the project.

The PPA of this project has been analysed by "Prayas", the same group
which analysed the Enron PPA. The PPA is heavily loaded. Their
analysis shows that power will cost about Rs 7 per unit - without
including the cost of transmission and distribution - and even higher
for peaking power. The NBA has asked the Madhya Pradesh Government and
the project promoters to answer one question - how much will the power
cost? They have been evading a reply.

Remembering Enron, a sense of deja vu prevails. It will be
really a tragedy after a farce, if five years hence (if the Maheshwar
project is at all built), the MP Government is found to be squirming
in a manner similar to that of the Maharashtra Government today.

What is needed is a comprehensive and transparent review of all the
Power Purchase Agreements. The ability and talent to do an accurate
analysis of the PPAs is certainly there in the civil society (if not
with the Government).  But whether the Government has the courage and
honesty to do this seems doubtful.