Statement of Machimar Adhikar Sangarsh Sangathan on the CERC order on tariff revision of Tata Mundra project

Statement of Machimar Adhikar Sangarsh Sangathan on the CERC order on tariff revision of Tata Mundra project

Mundra: February 25, 2014

We are shocked at the Central Electricity Regulatory Commission’s (CERC) compensation order of last week, for Tata Power’s 4000-megawatt Mundra ultra mega power project (UMPP) in Gujarat to make up for the increase in cost of imported coal.

As per the order, state power utilities will now be compensated with 52 paise per KwH tariff hike over the next 12 months. The Mundra UMPP, which is partly financed by International Finance Corporation (IFC), Asian Development Bank (ADB), Korean ExIm Bank and others, supplies power to five states – Gujarat, Maharashtra, Haryana, Rajasthan and Punjab.

In 2011, Tata Power, along with Adani Power, had requested CERC for a tariff hike after the Government in Indonesia – from where both companies import most of their coal requirements at Mundra – hiked the cost of coal to an international benchmark, making it costlier to import. Order on the Adani plant is not yet out.

Consumers paying for bad business decisions
By this order CERC is passing on the cost of bad business decisions made by the companies to the consumer. Procurement of coal, machinery or technology is entirely in the purview of the companies and the consumer cannot be held liable for any bad decisions made by them. The consumers cannot be made to pay for Indonesia hiking its coal prices, nor can she be held responsible if company’s forecast of profits backfired.

Bad precedence & invalidating PPAs
By revising the tariff, CERC has made a bad precedence. There is no way that CERC can now not review the Power Purchasing Agreement (PPA) made between other companies and state utilities. By some estimates, the decision has paved the way for around 48,000 MW worth of generation capacities, which inked long-term deals through fixed tariff-based bidding, to seek a price revision.

Bids are won for these projects by quoting the lowest tariff and once secured the project, they move CERC and revise the tariff. Reliance Power owned Sasan project has already approached CERC to renegotiate tariff citing expensive foreign currency borrowings and the rupee’s fall. This order is an invitation for companies to swindle the people.

Real Costs not accounted yet
However, the real costs of coal projects, particularly the Mundra project of Adani and Tata, cannot be calculated unless the social and environmental costs are accounted. Livelihood of thousands of fisherpeople are getting affected by these projects; mangroves and mudflats are destroyed; fly ash and coal dust is impacting the dry fish, salt-pan, horticulture, animals grazing on coal infested grass and the health of elderly and children.

In a report which detailed IFC’s violation while financing the Tata Mundra project, the independent recourse mechanism of IFC, Compliance Advisor Ombudsman (CAO) observed:

“IFC’s review of its client’s (Environmental and Social) E&S assessments was not commensurate with the risk involved. IFC paid insufficient attention to the requirements of the Performance Standards. IFC should have required that its client commission additional E&S assessment in order to ensure compliance. IFC did not pay adequate attention to verifying whether pre-project consultation requirements were met. IFC failed to assure itself that directly affected fishing communities were engaged in effective consultation. IFC’s E&S review regarding marine impact did not meet the due diligence requirements set out in the Sustainability Policy. IFC has failed to ensure that its client has correctly applied the requirements of the Thermal Power Guidelines. IFC failed to meet the requirements of the Sustainability Policy despite sufficient indications of project-related displacement (both physical and economic) as to require objective assessment. IFC should have advised that CGPL’s consideration of cumulative impact needed to go beyond that contained in the SEIA. IFC is unable to demonstrate that its client’s monitoring is commensurate to risk.”

After IFC, the Board of Directors of ADB approved the recommendation of its accountability mechanism, the Compliance Review Panel (CRP) for full investigation, as published in its Eligibility Report.

In its report, CRP says, “The CRP finds prima facie evidence of noncompliance with ADB policies and procedures, and prima facie evidence that this noncompliance with ADB policies has led to harm or is likely to lead to future harm. Given the evidence of noncompliance… the CRP concludes that the noncompliance is serious enough to warrant a full compliance review.”

Unless these serious issues are taken into account, the real cost of the project can never be calculated. All that CERC is doing will only result in giving undue benefit to the companies, at the cost of consumers. By doing this, CERC is committing a dereliction of their duties to be a fair and impartial regulator.

Wrong planning
One cannot ignore the fact that this is happening because of misplaced priorities, wrong planning and poor integration. While the Integrated Energy Policy 2012 estimates that by 2032 power demand could reach nearly 7.8 lakh MW, where the share of coal is expected to be 47%, the Ministry of Environment and Forests have already cleared or are in the process of clearing coal projects with capacity of 7 lakh MW – almost 90% of the total demand. Such unplanned, unregulated expansion of projects can only lead into situations where companies fight for bigger share of profits and consumers are left to the mercy of these companies.

Contact:
Bharat Patel - +91-9426469803
Joe Athialy - +91-9871153775

http://masskutch.blogspot.in/

MASS Padyatra

Machimar Adhikar Sangharsh Sangathan

Address: At & Post Bhadreshwar, Ta: Mundra, Kutch – 370411

Email: mass.kutch@gmail.com Phone: 9426469803 Website: http://masskutch.blogspot.com

Reference Date August 4, 2011

Press

Release

Concluding their historic journey in Bhuj today over 5000 fisher folk, salt pan workers, pastoralists, and farmers from several villages in Mundra Taluk submitted a memorandum to the collector’s office today. United under the banner “Save the sea, save the land, save the environment” the fisher folk and farmers were protesting the destruction of their livelihood by power plants in the area constructed by industrial giants such as Adani and TATA. They beg

an their historic padyatra from Bhadreshwar yesterday and were joined by Punamben Madam, BJP MLA Mahua Dr. Kanubhai Kalsaria and Local Leader Kiritsinh Jadeja , Husen Kara, Amd Elias Majaliya also present at the inauguration of the padyatra spoke passionately about the needs of fisher folks and salt pan workers. The Padyatra stopped at Kera gaam and spent the night with lively songs, slogans, and speeches on their efforts to save their livelihood. Leaving early next morning the yatra reached Bhuj mid day to be joined by more people in support and solidarity of the movement.

The padyatra was initiated by the threat of destruction of bhanders (where fisher folk live during the 9 months fishing season) by the British based OPG power plant and the KPGL power plant (Kutch Power Generation Limited). The two power plants have severely curtained the fisher folk’s access to the sea as well as destroying their fish yield as a consequence of the outlet channels. The energetic gathering which included women and children bearing signs and slogans highlighted issues that have threatened their livelihood for the past several years.

The 31 point memorandum that was submitted to the collector’s office detailed the adverse impact on the lives of all these communities by companies such as ADANI Mundra Port and SEZ, KPGL, OPG and TATA power plants. The memorandum states that in Bhadreshwar the lives of over 6000 fisher folks are at stake should the OPG plant come up. In addition, the livelihood of 5000 salt-pan workers and 7000 farmers and Maldharis, who depend on the Gauchar land of the village and on farming, is also threatened by the OPG power plant. Mega Ports, SEZs, power plants, desalination plants are concentrated on the coastline between Bhadreshwar and Mandvi which has been declared ecologically sensitive and is the home of traditional communities involved in fishing, salt making, agriculture and animal husbandry. According to the study conducted by the Institute of Ocean Management, Anna University, Chennai the coastal strip from Luni to Vandi is especially susceptible to erosion, and should the power plants be established the area will suffer irretrievable damage. The Mundra coastline is unique for its mangrove forests which is a delicate ecological system that harbours crustacean and other protected species and provides a natural defence against cyclones. However since 1998, 3000 hectares of mangrove forests have been illegally destroyed by Adani group. In spite of media attention and ministry’s assurances that action will be taken, no action has been taken so far and the destruction of mangroves continues till date.

Furthermore, recognizing the severe problem of fresh water shortage in the area, the Government of Gujarat has already spent the sum of Rs. 8 crores on the area between the OPG Power Project and KPGL Power Ltd in order to create bunds to prevent salinity by conserving rain-water. However the power projects will render the effort a failure.

People fear that the Gulf of Kutch has exceeded its carrying capacity due to indiscriminate industrial expansion on either side. However the government has no study of the combined impact of the effluent discharged by all the industries and approves every project by examining each project individually. In the interests of the communities that survive on the natural resources of the Gulf of Kutch, It is imperative to understand the cumulative impact of all the industries to ensure that the ecology of the Gulf of Kutch is not irreversibly damaged and destroyed.

In addition to the destruction of the marine environment, land in Mundra has been severely affected. The corrosive smoke discharges from coal burning in the power plans have already caused extensive damage to salt pans, which is a major occupation in the area (Kutch produces nearly 70% of Gujarat’s salt production). Salt is gathered for drying onto flats, because of the smoke discharge, the top layer of the salt turns black and affects the quality. Efforts to maintain quality by removing the entire top layer results in a significant loss in weight to the output of salt pan workers who are finding it increasingly hard to eke out a living. The smoke discharge has also had an adverse impact on fisher folk who dry their fish on lines before it goes to the market. Similar to the salt, the smoke discharge sticks to the drying fish affecting their quality and making them unsuitable for consumption. While smoke stacks cause damage to the salt pans, the intake and output lines to cool the power plants have resulted in increasing the salinity of the ground water in several villages. For instance 1600 hectares of chikoo, coconut and date farms have been destroyed as consequence of ground water salination due to the Adani’s sea water channels in the area. The channels draw large quantities of sea water and lead to destruction of marine organisms, including fish, thereby affecting the livelihoods of fisher folk. On the 15^th of December 2010 the company was served a show-cause notice by the Ministry of Forest and Environment as this illegal encroachment violates the CRZ Notification. However, despite the show-cause notice no worthwhile action has been taken either by the company or by the administration.

The fish workers of Mundra solely depend on fishing and are particularly vulnerable because they need access to the sea and the fish to make a living. The power plants create massive intake and outtake channels that have severely curtailed fisher folk's access to the sea. Additionally, the discharge by the plants into the sea after cooling the plant is of water temperatures higher than the sea. Even small changes in water temperature of the sea results in dramatic impact of the fragile ecosystem on which plankton and other sea life are dependent. In the past few years fisher folks on the coast of Kutch have already noticed drastic change resulting in significant reduction of their fish yields. In Tragdi village for example, which is well known for lobster fishing, during the 2010-2011 fishing season, the yield of lobster was negligible.

The combined impact of the projects on the environment, land and sea has long term impact on the lives of large traditional communities of Kutch. Realising that their future is bleak and their very survival is under serious threat, the fisher folk, salt pan workers along with pastoralists and farmers united with the fisher folk under the banner of the Machimar Adhikar Sangharsh Sanghatan the memorandum to the collector asked the government to safeguard the constitutional right to live and dignity and seek accountability from the Government demanding that they be allowed to pursue their traditional livelihoods and lead a dignified life.