A moral victory for the NBA
Frontline | Volume 17 - Issue 15, July 22 - Aug. 04, 2000 | 
www.frontlineonnet.com
The report submitted to the German government by a team of independent experts raises serious doubts about the record of the Maheshwar dam project in terms of resettlement and rehabilitation.
V.VENKATESAN
in New Delhi
A REPORT on the non-viability of the Maheshwar hydroelectric project, submitted by three independent experts for the German government and released "unofficially" in June, represents a milestone in the struggle of the people who are about to be displaced by the project in Madhya Pradesh. The 10-page report (excluding annexures) was first 'leaked' to the German media probably by a section of the German government, which commissioned the report. The Narmada Bachao Andolan (NBA), which is spearheading the struggle, made it available to the Indian media on July 4.
At the Maheshwar dam project.
The report notes that even preliminary data on the socio-economic impact of the project are unavailable. It points out that the affected people have not been consulted or properly informed about the project and that it has been sought to be implemented by the use of brute force and violation of human rights.
THE single largest source of foreign funds for the Maheshwar project is a loan of Rs.523 crores from a German bank, the HypoVereinsbank. The loan is tied to the purchase of power equipment from the German company Siemens. Siemens therefore applied to the German government for an export guarantee for the project. The guarantee is to be given by Hermes, a private company. If Siemens suffers any loss in the transaction, Hermes would pay it a token amount, while the bulk of the balance will be underwritten by the German government. This is an understanding that the German government has with Hermes, and hence the government's prior clearance is required to secure Hermes' guarantee.
As German law requires the government not to fund agencies involved in human rights violations, the government found it necessary to determine whether the human rights of people living in the project area were indeed violated, as alleged by the NBA. There were also complaints that the resettlement and rehabilitation (R&R) measures taken by the Maheshwar dam authorities were inadequate.
In order to resolve the issue, the German Development Ministry sent the team of three experts to the affected area to meet the various stake-holders and assess the ground realities of resettlement. This team visited the valley in the first fortnight of June 2000 and met affected people as well as project promoters and government functionaries at the State and Central levels. The team's terms of reference did not include the financial and environmental aspects of the project, but these issues are dealt with in the report to the extent they are relevant to R&R.
The team comprised Richard E. Bissell, at present executive director of the Policy Division at the U.S. National Research Council and formerly chairman of the World Bank's inspection panel, Prof. Shekhar Singh, environmental expert, faculty member of the Indian Institute of Public Administration, New Delhi, and member of the environmental sub-group of the Narmada Control Authority; and Dr. Herman Warth, environmental consultant to the German and Austrian governments and to the European Union.
In March this year, the First Secretary of Economic Affairs in the German Embassy in New Delhi, Bierbrauer, visited the dam site. Her report concluded that the dam construction was in an advanced stage and had reached a point of no return. She reportedly admitted that it was difficult to determine the veracity of rival claims - those put forward by the NBA as well as the project officials - as she was not an expert on the matter.
The experts' team in their turn found that the construction work had not progressed that far. A causeway for vehicles used in the work was built across the river 10 years ago. More recently, excavation was undertaken for the powerhouse, and some protective walls were built to prevent seepage of monsoon-fed waters into the site. Owing to protests against the R&R plan, work failed to meet the deadlines, and an attempt to resume the project would require establishing new time schedules for R&R and construction, the team observed.
Hermes will provide a guarantee to Siemens only with the approval of the inter-ministerial committee comprising the Development, Foreign, Economic and Finance Ministries. The Green Party, a partner in the ruling coalition, has said that a Hermes guarantee for the export of Siemens' turbines and generators for the Maheshwar dam would appear irresponsible in the wake of the report.
The decision of the inter-ministerial committee is awaited, and the delay has caused considerable anxiety to the activists and the people the Maheshwar dam will displace; not to mention S. Kumars, the private company entrusted with the development of the project. The NBA says that for the people of the valley each day that the decision is kept hanging means a fresh outrage, a further violation and a further push to the project to the state of being a fait accompli. Those familiar with German policy-making expect intense lobbying by both sides before a decision is taken on the report in the coming weeks.
Activists point out that while the Development and Foreign Ministries are in favour of accepting the report, and barring a Hermes guarantee to Siemens, the opinion of the other two Ministries are yet to crystallise. Indications, however, are that it would be difficult for the German government to reject the report as it is authored by experts who have international credibility.
Siemens could still go ahead without the Hermes guarantee and export its equipment for the project. It would, however, suffer an erosion of credibility.
THE experts' team spent 10 days in India, and recorded what it learnt from its interactions with a cross-section of the people associated with the project in various ways. It held more than 30 meetings with stakeholders (the project developer, project-affected people, government agencies, and other interested parties).
The annexures appended to the report include the list of official documents the team went through, excerpts from meetings with people, villagers and officials, and a detailed account of their work during the visit. S. Kumars described the report as unauthentic. However, it refrained from commenting on the findings.
Many of the team's findings have already been raised as issues by the dam activists. Uncertainty about the extent of land that will be seriously affected (submerged or waterlogged) by the project and the number of people to be affected in various degrees is one such.
Although there are hundreds of families engaged in river-based professions in Maheshwar, officials who met the experts' team apparently underestimated their number.
The team noted that the project provided instances of the most flagrant violation of the rehabilitation policy of the Madhya Pradesh government as well as the statutory clearances of the Ministry of Environment and Forests (MoEF).
In the opinion of the team, as per international standards of R&R (currently being followed for Sardar Sarovar and Tehri), the Madhya Pradesh Electricity Board (MPEB), which has won the contract for R&R from S. Kumars, should provide free of cost a minimum of two hectares of irrigated land (of a quality not less than the land acquired) per family, whether landed (where it would be in lieu of land acquired up to two hectares), landless (including those whose sources of livelihood is affected) or encroachers.
It is understood that those who got cash compensation were ignorant of this norm and were deprived of their free entitlement. Cash compensation is only a grant-in-aid, and it is not at all sufficient for a family to buy, in the current market economy, land elsewhere, the report suggested. Many of those who availed themselves of cash compensation have exhausted it and are now in distress after leaving their lands, the report says. "There is no reason why Indian citizens being displaced by a private sector project should be discriminated against to the benefit of the private investor," the report said.
The report found that the project recognised only sons who had reached the age of majority (and not major daughters) for purposes of R&R. The team suggested that the project treat all major (married) sons as a separate family and unmarried major sons and daughters as half a family and allocate each of them half the land and other forms of compensation. "This is being provided for in other projects; besides, it is discrimination against women if only major sons are so recognised," the report stated.
The report concludes that if R&R were executed as provided, the additional cost to the project would require an entirely new financing package several times larger than that currently provided. It is thus clear that in the absence of large areas of cultivable land and substantial financial resources and institutional capacities to ensure the just and fair resettlement of all the affected people, true rehabilitation is impossible.
According to the NBA's estimates, about 40,000 people will be displaced by the dam, if it comes up. The NBA alleges that the electricity to be generated by the dam would cost four or five times more than the power currently generated in Madhya Pradesh.
The NBA has called upon Ogden Energy Group, a power utility from the U.S. that has tentatively picked up 49 per cent of the project equity (a memorandum of intent was signed by Ogden during President Bill Clinton's visit to India in March) given up by the German companies Bayernwerk and VEW Energie in April 1999, to take cognisance of the report and withdraw from the project. Ogden has promised, in response to the talks with activists and the stakeholders, to look into it in August.
The project was initially meant to have 78 per cent foreign investment. Bechtel Enterprises and the PacGen companies of the U.S., which had first involved themselves in the project, later withdrew. They were followed by Oregon Utility PacificCorp, and the Dutch Bank, ABN-Amro.
The Maheshwar financial plan also envisages a Rs.182-crore loan from the HypoVereinsbank as well as from the BPI Banco of Portugal to pay for equipment from ABB Portugal. The loan for the ABB equipment will be guaranteed by COSEC, an insurance agency from Portugal. It is clear that these huge corporations, despite the overwhelming imperative to increase their markets at great social and environmental costs, are not prepared to take any risks in the process; they want public funds to guarantee their business.
With a question mark hanging over the supply of equipment by Siemens for the project, and with Ogden sending signals for a rethink, observers wonder whether the financial closure of the project would be feasible at all in the near future. The Central Electricity Authority (CEA), which had given techno-economic clearance to the project earlier, has apparently proposed to clear its firm financial package. The new package represents a very substantial increase (of nearly a third) over the earlier cleared cost of Rs.1,569 crores. The NBA has sent a legal notice to the CEA urging it to revoke the techno-economic clearance and reject the proposed financial package, in view of violations of the conditions in the clearance by the project authorities. Financial closure of the project is not possible without the CEA's clearance for the firm financial package..