Narmada Samachar: 25 June 2001

....
It is a travesty that the WCD, which, at the time of its
inception had unilaterally appointed commissioners without
taking the stake holders into confidence, is now calling
for debates and discussions on an agenda which is not
acceptable. Neither the representatives of the people nor
the representatives of a democratically elected government
were given a place on the Commission. The interests of the
have-nots perhaps do not matter to the WCD. 

Subsequently, when the ministry of water resources pointed
out serious lapses in the `India Country Study', prepared
by experts from outside the water resources sector, WCD assured
the government that its reservations would be given space
in the report. However, the assurance given was overlooked.
....

This refers to the letter `Dam & Dialogue' (June 13). The Union
ministry of water resources (MoWR) numerous flip flops over
what strategy they will be employing to deal with the World
Commission on Dams (WCD) are worth narrating. After the formation
of the WCD - through a transparent and participatory process
involving all sides of the dam debate - when the commission
wanted to hold its first consultation in India, it was promptly
sent a welcome message. Then at the last minute, under pressure
from the MoWR and Gujarat state government, the Indian government
sent a message to WCD saying that they were not welcome. 

In fact, the then chief minister of Gujarat even said that he
would arrest the WCD commissioner if he entered Gujarat. Incidentally,
at the South Asia consultation subsequently held in Colombo, India
was the only country among all other South Asian countries that
went unrepresented. 

When an independent team of experts was formed by the WCD to study
the Indian experience with large dams and a consultation was held
at Chennai and Delhi, the MoWR participated and also made certain
unsubstantiated remarks. 

By this time the MoWR had already become a full member of the
WCD forum and its representatives also attended the forums meeting
and even tried their best to influence the WCD report. 
....

GOOD news and Gujarat? The two had parted ways over the last three
years after three droughts, an unforgettable earthquake and the
Madhavpura Bank scam. The reunion has finally taken place and
rain showers have played Cupid: after months, checkdams are
full, relief sites are being shut down, dry reservoirs are
filling up and sowing has begun in the fields.

....

For starters, more than 13,500 checkdams built in the Saurashtra-Kutch
region under the Sardar Patel Participatory Water Conservation scheme
have been brimming with water after four days of rain. The checkdams
now have 1,520 million cubic feet of water in store, which will help
in recharging ground water as well as irrigating over 52,000 hectares
in drought-hit regions.

Last week's downpour also swelled up 175 small and medium dams in the
Kutch district as well as reservoirs in the Saurashtra and southern
Gujarat. At least 2,600 more checkdams are being built in Saurashtra,
to be completed by July end.
....

Just out: New Internationalist magazine special issue, July 2001

A special issue of New Internationalist on the ongoing crisis in the Narmada
Valley is being published to coincide with the start of the 2001 satyagraha
by villagers and activists confronting the waters rising behind the Sardar
Sarovar and Maan dams during the coming monsoon.

This New Internationalist account of the Narmada story is a journey.
Inspired by meeting NBA leader Medha Patkar at an international meeting,
British writer Maggie Black and artist Lucy Willis went to Narmada to find
out why the Sardar Sarovar and other large dams in the Valley have provoked
such extraordinary opposition. In people's homes, at village meetings, on
boats, trains, verandas and temple steps, they found out why people would
rather drown than let these dams be built. They learnt about a kind of
destructive injustice and a popular resistance unknown in their own society,
and they were amazed, appalled and inspired.

This account of the Narmada struggle begins at Bargi dam, whose oustees have
been treated with extraordinary official indifference since 1990. It
continues downstream to Maheshwar, where S Kumars' attempt to build the
first private hydro-electric dam in India is in trouble. Then they go to the
dam-site on the Maan tributary, where the Chief Minister of Madhya Pradesh
has ordered the violation of his own state policies and 17 tribal villages
face submergence without any re-settlement. On to the Sardar Sarovar
reservoir and more tribal villages faced with submergence, where people are
still being made offers of useless or already occupied land 12 years after
re-settlement should have been completed. Finally they visit other
communities affected by the SSP - the canal-affected, and those who have
been re-settled in Gujarat - and find out what is happening 'at the end of
the line'.

The Supreme Court judgement in the Narmada case, NBA's international
support, alternative water harvesting approaches, and facts about India's
love affair with large dams are all covered in the magazine. But Narmada's
people, interviewed by Maggie Black with the help of translators, and
painted and drawn by Lucy Willis, are the main focus. This issue of New
Internationalist provides a platform for some of those ruined in the name of
development by destructive grand-slam projects, illustrating what
globalisation in the form of an alliance between politicians, contractors,
bureaucrats and foreign capital does to people at the margins of society.

A limited number of copies of the Narmada issue of NI should be available
shortly from NBA office in Baroda.

Further information on this issue: maggie@black.win-uk.net
New Internationalist website: www.newint.org
Lucy Willis website: www.lucywillis.f9.co.uk
Enquiries about subscriptions: newint@subscription.co.uk
Enquiries about subscriptions in N. America: magazines@indas.on.ca
Enquiries about subscriptions in Australia: helenp@newint.com.au
Enquiries about subscriptions in New Zealand: newint@chch.planet.org.nz
General enquiries to NI: ni@newint.org

INDIA'S leading financial institutions had an uneasy lunch hour on May 31.
Some 400 slogan-shouting protesters arrived at the head offices of six
financial bodies in South Mumbai. Most of them were project affected
people from the banks of the Narmada and members of the Narmada Bachao
Andolan. They were there to challenge investments made by these
institutions in the Maheshwar hydro-power project on the Narmada in Madhya
Pradesh. Their demands were basic - that these institutions be more
transparent in their dealings and accountable to the public.

"Do not fund the Maheshwar project - the Enron of Madhya Pradesh," said
one banner carried by the protesters. "Financial institutions wake up!
Don't drown public money" said another banner in Hindi. The protest was
directed at the Industrial Development Bank of India (IDBI), Industrial
Finance Corporation of India (IFCI), Unit Trust of India (UTI), State Bank
of India (SBI), Life Insurance Corporation of India (LIC) and General
Insurance Corporation (GIC). These institutions together form a consortium
that is funding the Maheshwar project.

This protest opens several possibilities. One, it puts the Narmada Bachao
Andolan on a new plane. Two, it serves as an example to millions of small
investors whose life savings are in the hands of these financial
institutions and now threatened by mismanagement within these bodies.

Three, it creates the potential for linking the concerns of project
affected people in the Narmada valley with the worries of the urban small
investor. Consequently, four, there is a glimmer of hope for a growing
variety of public pressure to check corruption and mismanagement in the
financial sector.

......

By itself, the NBA's protest may prove feeble. But if the cause of the
project affected people can be linked to the anxieties of the small
investor, then this combined strength could have a far- reaching impact.
These efforts would also benefit from the burgeoning right to information
campaign all over India.

Yet all this together represents a faint hope for checking corruption and
mismanagement in the financial sector - unless large numbers of people
actively join such protests. Plus there is a vital role to be played by
some individuals, at the core of the financial system, who have the
courage to join this fledgling mobilisation against corruption and
inefficiency.

For nearly seven years now, a segment of the Narmada Bachao Andalon has
been fighting the Shree Maheshwar Hydel Project in Madhya Pradesh. Shree
Maheshwar is an independent power project, conceived along the lines of
all the expensive IPPs that followed Enron's Dabhol Power Company.

After Enron's project in Maharashtra and Cogentrix's IPP in Karnataka, the
Rs 22.54-billion Shree Maheshwar Hydel Power Company Ltd is arguably the
most controversial power project in the country.

In many senses the battle against Maheshwar has been far more difficult
than Enron because it does not involve the use of an expensive fuel like
naphtha/LNG, nor does it involve a messy fuel like coal.

Also, since hydel power is traditionally supposed to be cheaper than other
fuels, the activists have faced an uphill task explaining how this project
could be more expensive than Enron.

But the truth is that the Maheshwar project (which is to be built on the
Narmada river at Jalaud, and was handed over to the S Kumar group in
1994), is at least every bit as expensive as all IPPs.

Also, like all other IPPs, it is structured in such a way that almost 90
per cent of the funding comes from public finance. Remember Enron's $
2.9-billion project is touted as the largest foreign direct investment in
India although over half the project funds (nearly Rs 60 billion) have
either come from Indian financial institutions or have been guaranteed by
them.

Today, the Madhav Godbole committee report on Enron's project establishes
two facts beyond doubt. First, that Indian lenders and financial
institutions who have committed over Rs 60 billion to Enron failed to do
proper project appraisal and did not apply their minds before committing
the money.

Enron's power is at least five times more expensive than that produced by
the state electricity boards and clearly unacceptable.

In fact, several industries -- including the railways -- have pleaded
before the Maharashtra Electricity Regulatory Commission that they should
not be forced to buy power from Enron.

It also proves that it was the anti-Enron activists who go the tariff
projections right and leads to the conclusion that they should be given a
proper hearing in every other project where there is strong local
agitation.

This is important because, one way or another, it is public funds that are
committed to large private (ad)ventures which pass off as greenfield
projects and Indian banks, institutions and small investors taking on the
risk profile of venture capitalists.

In the Maheshwar valley the NBA activists have been battling the Shree
Maheshwar project for seven years, but their focus was primarily on the
valley where it will displace several farmers and submerge fertile
agricultural land, and -- to an extent -- on the foreign lenders and
collaborators.

They also notched up crucial victories. For instance, a series of US
companies which had decided to participate in the project were convinced
to withdraw. In 1997, Bechtel Corporation backed out; in 1998 it was
PacGen which dropped plans to acquire a 49 per cent stake; in December
2000 Ogden Energy opted out of being a strategic partner.

After PacGen's exit, two German power utilities -- VEW Energie and
Bayernwerk -- agreed to acquire this 49 per cent minority stake but
withdrew in 1999.

In fact, the German government also decided not to support the project
after a huge debate in Germany and an independent study by its economic
and social welfare ministry (the report is posted on a German government
Web site dealing with the issue) citing concerns over rehabilitation of
project affected persons.

Later, Siemens Ag also backed off from its suppliers contract which was to
have been backed by the German government guarantee.

In January 2001, the Portuguese government turned down an application by
ABB Ltd (equipment supplier) for the COSEC guarantee for around Rs 2
billion which was to be counter-guaranteed by IFCI.

Stunning as it seems, this stream of withdrawals had no effect whatsoever
on the project itself. Every exit led to a quest for a new collaborator
and the project itself was unhampered by any paucity of funds.

Money is routinely made available to the promoters and at the latest
count, they claim to have invested nearly Rs 5 billion in Maheshwar.

The project currently has no strategic partner but it is unfazed. For the
Maheshwar activists, this resilience of the promoters has been a mystery.
It is only after the exposure of Indian lenders to Enron became public
knowledge that they realised what is the source of the promoters'
strength.

Lending by Indian banks and institutions is at the heart of all mega IPP
and greenfield projects and until they keep handing over funds in
driblets, a project never folds up.

A fortnight ago the NBA activists took their protests to the doorsteps of
Indian FIs by holding demonstrations at Reserve Bank of India, ICICI,
IFCI, Industrial Development Bank of India and the two nationalised
insurance majors -- General Insurance Corporation and Life Insurance
Corporation.

The demonstrations were followed by the presentation of a memorandum to
all these institutions urging them to take another look at their decision
to fund the project.

As always, the institutions' documentation talks tough. In this case, it
says that no further funds would be disbursed without a strategic investor
being in place, that the promoters will bring back all the capital
advances of Rs 1.064 billion with interest given to various agencies who
have not been awarded any contract, will appoint a concurrent auditor, and
bring in additional funds to meet cost over-run.

However, none of these have been complied with, and the NBA has now
decided to target the FIs by issuing a show-cause notice through Supreme
Court advocate Prashant Bhushan.

Among other things, the notice points out that not only have FIs ignored
the fact that various collaborators have walked out of Maheshwar, but it
does not even have environmental and techno-economic clearance for its
latest project cost.

Yet, the Indian lenders -- led by IFCI -- have committed to a financial
package of Rs 20 billion which is nearly 90 per cent of the project cost
of Rs 22.54 billion.

Without even going into the issues of rehabilitation, it seems clear that
Indian institutions seem to be bending backwards to accommodate Shree
Maheshwar - even when they have no resources to do so.

There is also the issue of power production. The project has a capacity of
400 MW, but this will depend on the strength of water available in the
Narmada river.

The activitsts have vehemently contested the company's claims of being
able to produce 400 MW of power except in the monsoons. The project cost,
which is high to start with, will lead to even higher cost power during
the non-monsoon period, they claim.

The cost has escalated from Rs 4.65 billion in 1994 to Rs 25.54 billion at
latest count in 2001.

The moot question is, are Indian FIs incapable of proper project
appraisal, or are there other forces at work behind their support to
Maheshwar?

The exit of so many foreign lenders alone indicates that there is at least
need for an independent Godbole-type inquiry. Despite the expensive
'education' provided by Enron, the DPC project is unaffordable.

Today, Indian banks and institutions are lobbying hardest on behalf of the
US company, in order to protect their money.

Fortunately, Maheshwar has not reached that stage, nor has as much money
been invested. But the facts presented by the activists make it clear that
there is more than reasonable doubt about the viability of the project,
even without going into critical issues such as rehabilitation of
displaced persons and land available for their resettlement.

Clearly, an independent inquiry, by a committee acceptable to all sides
needs to assess the cost and viability of the project as well as the
promoters' claims about how much has already been spent on it. Until then
the project has to be suspended.