MAC: Mines and Communities

World Bank/IFC gets hauled over the Indian coals

Published by MAC on 2012-02-20
Source: Statement, Press Trust of India

Earlier this month we posted an article condemning the World Bank-IFC's backing of a polluting steel plant in India: India: Jindal Steel makes bloody attacks against Orissa villagers

Yet another IFC-supported project was recently submitted to the IFC's Complaints Advisory/Ombudsman (CAO) by communities aggrieved at the impacts of Tata Power's huge Mundra coal-fired plant in Gujarat - backed by the IFC to the tune of US$500 million.

Claiming the CAO report is "profoundly silent about the violations we have raised in the complaint", the Association for The Struggle for Fishworkers' Rights (MASS) accuses the Advisory/Ombudsman of failing to recognise "the absence of cumulative impact assessment, [and of] fishing communities as affected population"

MASS cities numerous omissions in Tata's environmental clearance process, adding that: "CAO should have covered in its assessment the other adversely impacted people, like the farmers, shepherds/ cattle herders, whose lands have been usurped for the project, and the other externality costs".

It's not only the CAO's dispute resolution process which is being judged a failure in this instance.

Thanks to an increase in the costs of coal to be imported from Indonesia, Tata has warned that the scheme could become a "non performing asset", unless five Indian customer states pay considerably more than they bargained for.

In what might well be viewed as an attempt to "twist the arms" of governments, Tata Power's managing director says: "We have told the beneficiaries that if you can't pay this tariff...[then] we will sell it to somebody else."

Two other Indian coal-fired power plants were also suspended this month.

The government's National Green Tribunal ordered construction halted at OPG Power's site in Gujarat due to the absence of full government clearances.

And NTPC's Gajmara project in Orissa was postponed by the Environment ministry because of its many "loose ends".

CAO Dispute Resolution Process on Tata Mundra Coal Project a Failure

Machimar Adhikar Sangharsh Sangathan Statement

14 February 2012

Assessment Report does not understand the complex issues and is unfairly protective of the company

Mundra, Kutch: Disappointing. This is how we, members of the Machimar Adhikar Sangharsh Sangathan (MASS - Association for the Struggle for Fishworkers' Rights) see the assessment report of the Compliance Advisor Ombudsman (CAO) on our case against Tata Mundra coal power project. One, CAO fails to understand the deep-seated issues we raised in our complaint. Two, its Ombudsman goes out of the way to justify the company for its omissions and violations.

An assessment begun in August 2011, the report projects, us, the complainants as adamant and unreasonable; that we are not prepared to enter into a collaborative process of dispute resolution. For us, this finding indicates that CAO has fallen into the sweet talk and PR of the company, whose track record in many other projects in the country is notoriously dismal.

The report cites CAO's view that a collaborative process may have been helpful in this case to address many of the concerns. Had we engaged in an open dialogue, CAO reports, the company could have enhanced benefits such as provision of health and schooling services for fishing communities. This is a very myopic view and a simplistic solution to the complex problems the company has brought to us. The report is also profoundly silent about the violations we have raised in the complaint.

We had pointed out in our complaint the absence of cumulative impact assessment; IFC and its client's failure to recognize fishing communities as affected population; and the absence of environmental clearance for in-take channel, conveyer belt, port and railway line (all being shared with the adjacent Adani project), and for the open cooling system. CAO purposefully ignored to mention these issues in its report. We do not think CAO fully understands the issues we brought to their attention.

In the report, CAO has not failed to mention that some fishworkers are satisfied with what the company has compensated them, without remembering that the complaint was from the aggrieved communities and not the other. We believe CAO should have covered in its assessment the other adversely impacted people, like the farmers, shepherds/ cattle herders, whose lands have been usurped for the project and the other externality costs.

CAO's utter failure to accurately assess the broad concerns in our complaint and to ensure a conducive mediation process is disappointing. We hope that the compliance process will be more prudent, objective and forthright in looking at the issues that we have raised, particularly in the context of the poor assessment report, the long-term harms this project has created, and the multiple policy violations.

Hard decisions must be taken to save threatened communities and the marine and land resources from the long-term havocs of the coal power plant. There must be a full audit, not just a desk-based review from distant experts, and ToR for the audit must be disclosed.


Additional information

In June 2011 Machimar Adhikar Sangharsh Sangathan (MASS - Association for the Struggle for Fishworkers' Rights) sent a complaint to the Compliance Advisor Ombudsman, the recourse mechanism at the International Finance Corporation, of the World Bank Group. The complaint now moves to the compliance arm of the CAO, after the Ombudsman has submitted the assessment report.

The complaint emerged to hold IFC accountable for co-financing the 4,000 MW coal-based Tata Ultra Mega Power Plant. Lodged by fishing and farming villagers, the complaint claims that due to flawed design and execution, including breaches of mandatory client obligations, the mammoth coal-fired power plant is contributing to the destruction livelihood of thousands of families and will cause irreparable damage to their fragile marine resources and agriculture.

With a total project cost of US$ 4.14 billion, the IFC is investing a $450 million loan and $50 million in equity. Other financial institutions funding the project are the Export-Import Bank of Korea, Asian Development Bank, India Infrastructure Finance Co. Ltd., Housing and Urban Development Corporation Ltd., Oriental Bank of Commerce, Vijaya Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Travancore, the State Bank of Indore and other local banks.

As the plant is located in the special economic zone (SEZ) that cuts across fishing grounds, habitat of diverse marine lives and wide expanse of farm land, complainants state that the project's social impact assessment is significantly flawed. Fishing communities were excluded from the list of those directly impacted; the major damage and potential loss of their livelihood was deliberately overlooked.

On the economic side, the recent Indonesian government's revision of its coal export pricing structure effectively doubled prices. This revision has immediate and severe impacts on the Tata Mundra plant. Tata Power Managing Director has said that it could become a "non-performing asset" and began actively lobbying the Indian government for a tariff revision as well as a diplomatic push to get the Indonesian government to revise its pricing structure. Whatever happens on the tariff front, if all costs are taken into account, including the huge social and environmental costs, we believe that the project can never be economically viable.

Contact: Bharat Patel
General Secretary, Machimar Adhikar Sangharsh Sangathan
Tel: +91-9426469803

Mundra project may become an NPA: Tata Power

Press Trust of India

5 February 2012

New Delhi - Amid costly Indonesian coal putting a question mark over the viability of many power projects, Tata Power has said the flagship 4,000-MW Mundra UMPP could become a "non-performing asset" if no decision is taken on increasing tariffs for electricity from the plant.

Tata Power bagged the Mundra project in 2007 on the basis of the lowest tariff bid of Rs 2.26 a unit, but a change in the coal pricing policy in Indonesia has disturbed the cost structure of this and other projects that are dependent on imported coal.

"It (Mundra UMPP) is not a non-performing asset to the extent net worth is there. One day, it could become if no decision is taken (on tariffs)," Tata Power Managing Director Anil Sardana told PTI in an interview.

"We will keep on generating (power from Mundra UMPP) till the time we could. When we have no shareholder money left out in the balance sheet, nobody will give us coal," he noted.

The electricity from the Mundra Ultra Mega Power Project, to be fired with Indonesian coal, would benefit five states, including Gujarat, Maharashtra, Punjab and Haryana.

The first unit of 800-MW has been synchronised. Tata Power, which bagged the project through competitive bidding in 2007, is in discussions with concerned states and the Centre over revising the tariff structure.

"We are not asking for any change in the fixed cost -- which is the cost on account of plant," Sardana said.

"We are only saying that whatever I get as a fuel, I toll and convert it into power. I am not asking for any charges for tolling. Change the variable cost for today as well as future so that plus and minuses are all yours," he said.

Despite doing everything right, these problems have come up, he added.

"If the country feels that they don't want to own the project, then perhaps it is a different feeling altogether. We have told the beneficiaries that if you can't pay this tariff, you say that you don't need this power. Then we will sell it to somebody else," Sardana said.

The Indonesian government's new law requires benchmarking of coal sales to an index-based price linked to global rates. This move has pushed prices of the dry fuel very high.

"Ninety paise of fixed cost for Mundra is the lowest for any project like this. In this amalgamated cost of Mundra, if the (offtakers) agree to differential price, the total difference in tariff is just 2 per cent. After revision, the power cost will be Rs 3.05 or Rs 3.10 (per unit)," Sardana pointed out.

National Green Tribunal directs that no construction till all approvals are obtained by OPG

Machhimar Adhikar  Sangarsh Sangathan (MASS) statement

15 February 2012

The National Green Tribunal on 08-2-2012 in a Judgment Order [made available on 14-2-2012 at] directed that no construction activity should take place with respect to the 300 MW (2x150 MW) Thermal Power Plant at Village Bhadreshwar, Taluka Mundra by OPG Power Gujarat till all approvals are obtained by the Project Proponent.

Construction had commenced at the site without all the required approvals including the Forest (Conservation) Act, 1980 and CRZ clearance. The ongoing constructions were challenged before the National Green Tribunal by Fisherfolks, Saltpan Worker and local villagers. The work on the project continues despite the fact all required approvals were not in place.

The NGT in its judgement cited the environmental clearance letter which clearly stipulates that the project proponent shall not start any construction/project enabling activities unless and until environmental clearance as well as all requisite prior permission/ clearances are obtained. [Para 13 of the Judgment].

The NGT held ‘that a cumulative reading of all the specific and general conditions...leads to the conclusion that the project cannot commence its activities until prior permission/ clearances are obtained from various authorities under different Acts/ law'.

The NGT further held that ‘it is well settled that in the absence of permission under the Forest (Conservation) Act and CRZ clearance , the EC granted in favour of Respondent No 3 becomes redundant in as much as the said EC is subject to permission and clearance granted under the Forest (Conservation) Act, 1980 and the CRZ clearance"

It is pertinent to point out that the Forest Clearance application was rejected by the Government of Gujarat and the MOEF has on 6th February, 2012 issued a Show Cause to OPG Groups to show cause as to why the CRZ Clearance should not be kept in abeyance.

As a result of the Present Judgment of the NGT, OPG Power Gujarat cannot proceed with its project unless they secure all approvals and responds to the Show Cause issued by the MoEF with respect to the CRZ Clearance. In case OPG proposes any change, they have to apply to the concerned authorities for approval.

Bharat Patel- 09426469803
Kanchi Kohali-09811903112
Machhimar Adhikar sangarsh sangathan
At.Po Bhadreshwar,
Ta. Mundra, Kutch -Gujarat

NTPC's proposed power project in Orissa awaits green clearance

Press Trust of India (PTI)

15 February 2012

Hyderabad - A thermal plant to be set up by NTPC, country's largest power producer, in Orissa has hit a roadblock following Environment and Forest Ministry's refusal to give green clearance, citing many "loose ends" in the project proposal.

The 2x800 MW Coal Based Super Thermal Power Plant proposed to be developed NTPC at village Gajmara, in Dhenkanal district of Orissa has been facing opposition from locals with regard to land acquisition also.

A Committee under MoEF, had noted that the project entails acquisition of forests and grazing land and observed that there are several forests in the study area. It therefore, decided that even though the terms of reference prescribed for the project had not specified the requirement for preparation and implementation of a wildlife conservation plan, NTPC shall duly formulate the same in consultation with the wildlife department officials at the earliest.

The Committee had, therefore, advised the PSU that not only an equivalent area of grazing land shall be acquired and developed but also grazing land in the study area shall also be upgraded. "The proposal was earlier taken up in the 36th meeting of the Committee held during November 14-15 last year, wherein it observed that the proposal in its present form had many loose ends.

In view of the observations as noted above, the Committee decided that the proposal is premature for consideration of grant of environmental clearance and accordingly deferred the proposal for reconsideration at a later stage," the Committee said in the MoEF website. When contacted a NTPC official said they informed the Ministry to withhold its application for environmental clearance as the coal allotted to the plant has been diverted to some other plant as the land acquisition itself is not completed.

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