Investment in infrastructure plays a critical role in ensuring a country’s development. It is perceived that growth in infrastructure will establish a better economy and create a more equitable world. This, however, has led to a significantly greater demand on natural resources for energy, water, and food. These infrastructure projects, which have been the main cause for rapid urbanization, have also been implicated in reports of increasing environmental damage and weakening human rights. To better understand the rationale behind these projects, one needs to understand the forces that propel these projects and the changes they bring.
To debate the above, CAG co-hosted two workshops in Chennai, from June 2 to 4, 2018, in partnership with Center for Financial Accountability (CFA) and Public Advocacy Initiatives for Rights and Values in India (PAIRVI). The first workshop was titled – “Demystifying International Financial Institutions” and the second was “Energy Finance”.
In the “Demystifying International Financial Institutions (IFI)” workshop, speakers covered various issues starting from the history of IFIs to their connection with large-scale infrastructure and energy projects in India.
The introductory session on IFIs, led by Priya Dharshini from CFA and Soumya Dutta from PAIRAVI, highlighted the role of IFIs such as World Bank (WB), Asian Development Bank (ADB), New Development Bank (NDB) and Asian Infrastructure Investment Bank (AIIB). The WB and ADB have taken on the role of “knowledge banks”. They publish thematic reports such as the Ease of Doing Business index and World Development Report, which enables them to influence policymakers to invest in certain kinds of infrastructure/development projects.
IFIs were established after World War II to harness and invest war profits. However, their investment rationale has not always been in the best interest of communities but in the interest of large conglomerates as was explained by Soumya Dutta, using examples of Sardar Sarovar Dam, Tata Power’s Mundra Ultra Mega Power Plant, and other worldwide development programs such as the Universalization of Elementary Education (UEE).
Joe Athialy, Executive Director, CFA, discussed the objectives of Asian Infrastructure Investment Bank (AIIB) and elaborated that AIIB does not have funds of its own, but is funded by member countries. Maju Varghese from CFA further explained about AIIB funded projects in India that have been co-funded by WB, ADB, European Development Bank (EDB), etc. The AIIB does not have its own safeguard policies. This may be an indication that the AIIB works hand-in-glove with other major IFIs under their safeguard policies. Further, these multilateral banks have an agreement with collaborating countries that provide them immunity under 1945 International Organizations Immunity Act. Tata Power’s Mundra Ultra Mega Power Plant, situated in the Gulf of Kutch in Gujarat, is an example. The project has resulted in severe and widespread environmental damages and has left migrant fishermen and salt pan workers in a struggle for their livelihoods. The project has also had a negative impact on marine life.
Other projects funded by IFIs in India, which have attracted international attention, are the Vizhinjam Seaport Project, Amaravati Sustainable Capital City Development Project, Madhya Pradesh Rural Connectivity project, and West Bengal Major Irrigation and Flood Management Project.
The two-day workshop on “Energy Finance” started with a session by Soumya Dutta from PAIRVI, on the types and sources of energy. For years, fossil fuels (coal, oil, and gas) remain the primary fuel for generating electricity in India. On Oct 1, 2015, India submitted Nationally Determined Contributions (NDC) before the United Nations Framework Convention on Climate Change (UNFCCC), stating that “Coal is the King” and that India will continue to use coal indefinitely. He strongly emphasized that continued coal usage is no longer an option, what with the fast depleting reserves and it’s grossly polluting nature. An early move to alternative fuels is critical.
In the next session on “Concept of energy transition to alternative energy sources”, Soumya Dutta spoke about transitioning from fossil fuels to renewable fuels and the rehabilitation of the millions of workers involved in the fossil fuel industry. He explained that unlike fossil fuels and nuclear energy, which have an inbuilt capitalistic nature, solar energy, for example, is perfectly amenable to decentralized power generation and utilization as an individual can install solar panels in his/her home and enjoy the advantages of renewable power. However, this alone will not be sufficient. There also needs to be a determined switch from our current high energy consumption lifestyle to low energy alternatives.
A discussion on the technical aspects around energy projects in Tamil Nadu included presentations by Vetriselvan, from Poovuzhagin Nanbargal (Friends of the Earth), Vishnu Mohan Rao (CAG) and Jesu Rethinam (CAN). Vetriselvan spoke about the damage caused by nuclear energy around the Kalpakkam and Koodankulam nuclear power plants. Without an effective nuclear waste management protocol, Kalpakkam is turning into a nuclear waste dump. Vishnu Mohan Rao explained the processes for pre and post-environmental clearance in the Environment Impact Assessment (EIA) and the lacunae in the system. Jesu Rethinam spoke about the effort by Coastal Action Network (CAN) to study the Environmental (Protection) Act, 1986, to oppose the Sethusamudram Shipping Canal Project in six districts, the impact of the proposed 11 thermal power plants in Nagapattinam district and the SagarMala programme.
In a session on “Case study of Cheyyur Plant Viability of project, IEEFA report on tariffs and environmental risks”, Nityanand Jayaraman gave an year-wise report on the issues surrounding the proposed Ultra Mega Power Plant in Cheyyur, and its likely impact on the environment and livelihoods of the communities in the vicinity of the project site. He explained that the project proponent had not taken into consideration the unique ecosystem of the area.
P. Dhilip shared insights from research done in CAG on “Monitoring and Compliance of Environment Statement”. Every commissioned thermal power plant has to adhere to certain monitoring and compliance rules and regulations. He spoke about data inconsistency and partial/no information provided by some thermal power plants in their annual Environment Statements (ES) filed with the state pollution control boards. He also pointed out the lacunae within Form-V (format for submitting ES) and the need for it to be updated.
The second day began with a presentation by Rajesh Kumar, CFA, on coal financing in India. An investigation into it by CFA yielded broad information on the financial framework behind these agencies. The policies of IFIs help project proponents (mainly private companies) get funds from funding agencies such as public sector banks and institutions in India. Besides not being transparent, the system is also flawed in other ways; for example, communities that live and work around these power projects are still living without power. In the next session, Priya Dharshini spoke about Non-Performing Assets (NPA) in India. RBI has defined NPA as a loan where interest and/ or installment of principal remains overdue for a period of more than 90 days. The NPAs are currently affecting the health of our banking system, putting investments and savings of the common man under risk.
Joe Athialy, Executive Director of CFA presented on Tata Power’s Mundra Ultra Mega Power Plant and its effects on the environment. He applauded the efforts of CSOs in India that have studied the impact of these projects and have sought legal recourse. He also detailed the sequence of events leading to the US Supreme Court agreeing to admit the appeal by communities in Kutch district against the financiers of the power plant, challenging the immunity enjoyed by International Finance Corporation, the private sector lending arm of the World Bank.
A case study on the coal scam in Tamil Nadu was presented by Jayaram Venkatesh from Arappor Iyakkam. After the Directorate of Revenue Intelligence (DRI) brought India’s coal scam to light, Arappor Iyyakkam filed requests under RTI Act to TANGEDCO regarding usage of domestic coal, international coal, tenders awarded between 2012-2016, and purchase orders for the coal in Tamil Nadu. Based on this data, they highlighted a scam between Rs. 1,730 crores to Rs. 3,025 crores in the purchase of international coal by TANGEDCO. They have filed an additional affidavit at the Delhi High Court through Senior Advocate Prashant Bhushan who filed a PIL for over-invoicing in the purchase of coal and coal equipment. Despite much evidence presented in the case, the CBI has taken no action against the offenders, further weakening an already lax system. At the end of this session, participants discussed thoughts and ideas towards promoting the work of CSOs and drawing up an action plan related to the two-day workshop and the way forward plan for the next six months.