|
It is hardly news that state governments in India continue
to deny citizens their basic rights of rehabilitation,
or that they continue to flout the law even after repeated
court strictures in this regard, all in return for dubious
promised social benefits. Yet even in this sorry background,
the saga of the Maheshwar Dam project in Madhya Pradesh
is discouraging.
Of
the many large dams (as many as 30 in number) in the
Narmada Valley, the Sardar Sarovar has perhaps received
the greatest media attention. Yet the Maheshwar Project,
near Mandleshwar in Khargone district, is very significant
in its own way - not least because it was the first
privatised hydel project in India. The promoters of
the project are the S. Kumars group, a group run by
the Kasliwal family that originally began in textiles
but has now diversified into power generation, tyre
manufacturing, infrastructure development, financial
services and even Information Technology. For this particular
project, the group created a new company - Shree Maheshwar
Hydel Power Corporation Limited (SMHPCL).
The project has been controversial and plagued by various
difficulties from the start. Since 1997, when work on
the project first began, local people who would be dispossessed,
displaced or deprived of livelihood by the project,
have been involved in protests against the project.
The affected people, including peasants, fisherpeople,
boatspeople and agricultural workers of the area, have
resisted the project because their legitimate demands
for adequate compensation and rehabilitation have thus
far been denied. The popular protests and the inability
or unwillingness of the promoters to meet any of the
demands in turn created such conditions that successive
external partner companies – US-based multinational
Bechtel in 1997, the German companies Bayernwerk and
VEW Energie in 1999, the US power company Ogden in 2000
- have left the project.
Then there were barriers created by the often problematic
financial activities of the main promoters. Between
1998 and 2000, two S. Kumar group companies - Induj
Enertech Limited (the holding company for SMHPCL) and
Modak Rubber and Textiles Limited (along with several
other companies – 42 in all) were sanctioned loans by
the Madhya Pradesh State Industrial Development Corporation
in the form of ICDs (Inter-Corporate Deposits) without
any proper application, documentation, scrutiny, and
securities. The outstanding debt for these 42 companies
is now more than Rs. 800 crores. Default on these loans,
which were improperly received in the first place, led
the state government of Madhya Pradesh to file an FIR
and initiate criminal proceedings against the promoters
of the Maheshwar project.
Work on the project was suspended from 2001 to 2005,
as the project properties were attached due to default
and the public financial institutions also stopped providing
finance for it. However, in September 2005 the Madhya
Pradesh state government waived the condition of grant
of security by handing over shares of SMHPCL of Rs.
30 crores against the settlement of outstanding loan
of Rs. 103 crores. In addition, the returnable amount
was reduced from Rs. 103 crores to Rs. 77 crores and
the rate of interest was brought down from 14 per cent
to 8 per cent. Amazingly, no explanation has been provided
as to why all these concessions are being given to a
private party and declared wilful defaulter, at the
cost of the public exchequer.
But all this enabled the work on the Maheshwar project
to be resumed in 2006, with SMHPCL once again seeking
large loans and equity participation from public financing
institutions, even in excess of the amount permitted
under the law. And so once again the affected people
are on the streets, to stop a project that is seen to
be flawed on technical, social and financial grounds.
The proposed 42 km. long Maheshwar reservoir will submerge
both a rich land economy as well as a rich river economy.
As per the Ministry of Environment and Forests clearance
given to the SMHPCL in 2001, the dam will submerge over
8000 families in 61 villages in the area partially or
fully. This is in addition to the 5000 landless Kewat,
Kahar and Dalit families who will lose their entire
livelihoods of sand quarrying, fishing, etc. if the
dam is built, even if their homes may escape being submerged
in the project. It also excludes the large number of
people who may be additionally affected by large scale
water-logging expected in the adjoining area.
The R&R of the project is governed by the Rehabilitation
Policy of the Madhya Pradesh government, as well as
the conditions of the environmental clearance of the
MoEF. Both of these require that the affected people
be settled with agricultural land in the lieu of agricultural
land that they are losing, and that only in very exceptional
cases that can an oustee receive cash compensation.
Yet, till today, not a single affected family has been
given agricultural land. Further, the MoEF itself has
noted that there is no rehabilitation plan at all for
the affected people. In a letter sent in early June
to the state government, the MoEF has even directed
that work on the project be stopped until a plan with
details of proposed housing units, agricultural lands
identified/required/developed, the implementation schedule
of R&R, etc., is worked out and made available.
But the more urgent question relates to the perceived
social gains of this particular project. In particular,
most independent studies come to the conclusion that
the power produced by this project will be far less
than promised as well as prohibitively expensive, so
the proposed gains are largely illusory.
Some of this is because of technical reasons. The Maheshwar
Project site is at a point in the river where there
is no river gorge and where river flows through the
plains. Because it is situated in the plains of the
Narmada valley with a low rim, there is a technical
and design bar to higher production of power. Because
of this, nearly 80 per cent of the power will be produced
during the four monsoon months, and for the rest of
the year the Project will produce an average of only
1.5 hours a day.
Thus, although the Maheshwar Project has an installed
capacity of 400MW, it will have a firm power production
of only 92 MW initially and 49 MW finally, since the
actual extent of firm power in a hydel project is based
on the available water flows and is typically only a
fraction of the proposed installed capacity. That is
why in periods of drought, hydel power does not suffice
because of inadequate flows, and this is borne out by
the performance of other hydel projects in Madhya Pradesh
in recent years.
The delays in the project have cause the estimated project
outlay to go up from Rs. 465 crores in 1994 to around
Rs.2233 crores today. Yet Power Purchase Agreement with
the MP State Electricity Board has a ''deemed generation''
clause, requiring compulsory payments at deemed generation
levels, irrespective of actual production and provides
for guaranteed rates of return on equity ranging from
16 per cent to 32 per cent for 35 years. This combined
with the massively increased outlay, significantly increases
the cost of power from this project.
As a result, the likely power tariff has gone up enormously.
Based on the tariff formula in the Power Purchase Agreement,
it may be conservatively estimated that the average
cost of power from the Maheshwar Project will be around
Rs. 3.5 to 4 per kWh at bus bar, and the cost of peaking
power will be much higher. (This compares with the cost
of the power produced at bus bar by the State Electricity
Board today at Rs. 1.25 per kWh for thermal and Rs.
0.25 per kWh for hydel, and the cost of the NTPC produced
power at Rs. 1.67 per kWh.)
Clearly, the cost of Maheshwar power will be prohibitively
expensive, with the potential to ruin the MP State Electricity
Board. All the signs exist of another Enron-type fiasco
in the making, this time with the added devastation
produced by large scale displacement and completely
inadequate rehabilitation.
|
