Press Statement | 26 June 2017

Bailout Pleas by both Adani and Tata Projects in Mundra
a symptom of larger menace;
Government should not acquire liabilities, to waste public money;
Both corporations should be held accountable for the colossal social and environmental impacts.

 Mundra, Gujarat: We are not surprised that both Adani and Tata power projects have reached a point where they are looking to rescue their power projects in Mundra. While Adani Power has written to the Government run Gujarat Urja Vikas Nigam (GUVNL) to bail out its Mundra power plant, Tata Power has written to the Centre proposing to sell 51 per cent equity of the ailing asset for a nominal fee of ₹1.

Machimar Adhikar Sangharsh Sangathan (MASS) from the very inception of these projects been stating that they are neither socially and environmentally viable but also makes no economic sense. The projects have, since its inception have been loss generating ones, due to poor planning, unrealistic projection and flouting of rules. In April this year, the Supreme Court declined their plea for tariff revision.

If the colossal social and environmental of these projects, and particularly the impacts on the livelihood loss was properly calculated, the project could have never been viable. That was deliberately not counted, and the thousands of fish-workers along the coastline of this project who lost their fishing grounds leaving them in a without any livelihood options were never compensated adequately to try to make these projects economically viable. This has been the contention of MASS ever since the onset of the project to which no heed was paid either by the government or the funders of the project.

MASS raised the issues of violation of Adani project at different forums, including Gujarat High Court and Ministry of Environment and Forests. The findings and recommendations of Sunita Narain Committee (2013) were never acted upon. Had the findings got the required attention, damages could have lessened years back.

This also raises serious concerns about the nature of development projects funded by International Financial Institutions and the also raises serious concerns regarding the process of accessing these projects before funding them. Tata Mundra UMPP has been partly funded by the International Finance Corporation (IFC) and Asian Development Bank (ADB). Both these institutions provide funding for development projects after due diligence and in spite of that chose to fund a project which did not make any economic sense apart from being in violation of the environmental and social safeguards of both these institutions.

Both ADB and IFC grievance redressal bodies; CRP and CAO respectively received complaints filed by MASS. The audit report of the CAO confirmed the loss of livelihood caused to thousands of fish-workers and said that IFC failed in its risk assessment of the fishing community. The CRP report also confirmed the same.

What also concerns us is the fact that appeal has been made to the governments to bailout these loss making projects. Bailing out both Adani and Tata Power would be spending more public money to bailout corporates specially at a time when Public Sector Banks are saddled with non-performing assets or bad loans to the tune of a staggering Rs 6 lakh crore (Bad loans rose by over Rs 1 lakh crore in the first nine months of last fiscal to Rs 6.07 lakh crore by December 31, 2016).

Rather than the government bailing out these projects, they should be made accountable for the loss that their projects caused. The erring corporations and the government officials who helped these corporations to hide their violations all these time should be brought to book.

What one is witnessing in Adani and Tata projects is only opening of floodgates for projects that were planned and promoted on ill-conceived policies of the government, promotion of coal based projects as the only way out for meeting India’s energy needs and the failure to put checks and balances to ensure strict compliance of laws and protection of humans and environment. Governments at the Centre and states should review such projects which are on the verge of collapse and should put systems in place to make sure that they do not end up as liabilities to the government, and eat up public money.

Bharat Patel
Machimar Adhikar Sangharsh Sangathan
Contact: +91-9426469803

Images: https://www.flickr.com/photos/joeathialy/albums/72157629025286879