Press Release
June 28, 2000

Acceptable Resettlement “Unlikely or Even Impossible”

The German Ministry of Economic Cooperation and Development today released a strongly critical review of resettlement for the Maheshwar Dam on India’s Narmada River. The review was commissioned due to controversy over a proposed export credit guarantee from the German government to multinational company Siemens for the supply of turbines to the project. The review team was led by Dr. Richard E. Bissell, Executive Director of the Policy Division at the US National Research Council and a former chairman of the World Bank’s Inspection Panel.

The report will put major pressure on the German government to withdraw from Maheshwar. Such a withdrawal would force Siemens to drop out or find another government with lower standards to guarantee the turbine sales from one of the company’s foreign subsidiaries. Activists are ready to oppose any government which may be prepared to take up the export credits for Maheshwar.

The increased uncertainty over the future of Maheshwar will also have repercussions on US-based Ogden Corp., which is slated to make a major investment in the project.

Following are some of the conclusions of the review:

* The number of people who would lose their land and jobs to the project is “much higher” than claimed by project authorities, and the amount of replacement land required for resettlers “would be many times higher than the currently calculated requirement”.

* It is “unlikely or even impossible” that agricultural land required for resettlers would become available. “Land-for-land” resettlement is required by Madhya Pradesh state policy and the clearance for the project from the central government Ministry of Environment, and is “considered the minimum acceptable level of rehabilitation” by the review team.

* “the requirement of money for just the agricultural land would be many times the current budget for the entire R&R [Resettlement and Rehabilitation] plan.”

* The payment of cash compensation to farmers by project authorities “clearly violates the standard” that farmers should be provided with replacement land.

* “the Madhya Pradesh Electricity Board has been contracted by the S. Kumars to carry out R&R. However, according to their officials, the [Madhya Pradesh Electricty Board] has little or no experience in implementing R&R . . . the resources and capability to carry out R&R in accordance with the stated policy and conditions of clearance, do not exist.”

* “the project planning process was neither transparent nor participatory. Even now, there is little transparency, participation and democracy in the process of implementation.”

* “the benefits of the dam to the regional and national power sector have become increasingly controversial as the cost of construction is now four times the estimate submitted to the government ten years ago.”

Heffa Schücking of the German NGO Urgewald said “The Bissell Report confirms what we have long been telling our Government. As the Government themselves have commissioned this report, we are confident that Siemens application for export credit insurance will soon be turned down.”

The bulk of foreign investment in the Maheshwar Dam is slated to come from New York-based Ogden Corp. Despite intense local opposition to the project, Ogden Corp. signed a Memorandum of Intent to take a 49% shareholding in the 400 megawatt dam during President Clinton’s visit to India in March this year.

“The Bissell Report makes a mockery of Ogden’s statements that the project will improve the quality of life of local people and shows that the number of people affected will be many times higher than they claim,” says Patrick McCully. “Ogden should quit Maheshwar now.”

Ogden Senior Vice-President, Kent Burton, has assured activists that human rights and environmental considerations would not be disregarded by the company, and that Ogden is committed to pursuing a democratic, transparent process in their involvement in the project.

A number of international investors have already pulled out of Maheshwar citing social, environmental and economic concerns. These include San Francisco engineering giant Bechtel, Oregon utility PacifiCorp, Dutch Bank ABN-Amro, and German utilities VEW Energie and Bayernwerk.

Intense local opposition to the project has resulted in numerous dam site occupations, marches, rallies and hunger strikes which, despite mass arrests and beatings at the hands of police, have forced long delays in project construction. The Bissell Report notes that this opposition has meant that work on the project “has failed to meet any of its deadlines”. The project was scheduled to have been completed in 1998 but the report states that “construction work is limited to date”.

Maheshwar Dam is part of the Narmada Valley Development Project which envisages the construction of 30 large and 135 medium-sized dams in the Narmada Valley. The most notorious of these projects has been the mammoth Sardar Sarovar Dam under construction downstream from Maheshwar in Gujarat state. The World Bank and bilateral aid donors stopped financial support for large dams on the Narmada in the early 1990s. Maheshwar is the first attempt to finance one of these projects through the private sector.

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