A few hundred men and women stormed the Maheshwar dam site along the Narmada river in India in January, in protest at the 400MW hydel scheme which involves resettling over 10 000 people. The demonstration brought Indian hydropower under environmental scrutiny. To preserve the peace, and prevent any unwanted incidents, the project company voluntarily halted construction work.

In an effort to block hydropower development along the river, national and international environmentalists have joined forces. But their demands – a review of the project and evaluation of its impact on the surrounding area – rather than questioning the feasibility of the project, are raising doubts about the vested interests of groups who claim to be working on behalf of local people.

Described as a run-of-river scheme which will harness the natural flow of the Narmada river, the Maheshwar dam is part of the Narmada Valley Development Project – a plan to build 30 major, 135 medium and 3000 small dams along the Narmada River and its tributaries. The whole project has, for many years, been the target of environmental agitation. The Maheshwar scheme appears to have become a target for environmental groups because it falls under the auspices of this larger project. Those involved believe they are being dragged into controversies relating to earlier projects, and which are not relevant in the context of this scheme.

Environmental concerns are not matters which the hydropower industry can afford to take lightly; indeed the company behind the development (the Shree Maheshwar Hydel Power Corporation) believes it is over-sensitive to such issues. SMHPC’s concern is that hydropower development which is feasible, and does have the interest of the local people at heart, is not being given a chance by those jumping on the ‘eco-bandwagon’.

The environmental organization, NBA (Save the Narmada Movement), has accepted the self-imposed task of representing Maheshwar people – who, in fact, had not previously staged any protests about the Maheshwar development in the 20 years the project has been in existence. Dennis Quinn from US-based Pacific Corporation – one of the original developers – commented on this. ‘We visited the local community and talked to the people. The main thing they were concerned about was that it was taking a while for the project to get moving and for resettlement to start.’

SMHPC wants to know why it has taken local people 20 years to start expressing concern. ‘Had the local people been against the project, it would never have progressed to the extent it has now,’ Girish Bakre from SMHPC said. The question is, why have they started campaigning now when work has been going on at the site for several years?

For the past year NBA has led opposition to the Maheshwar scheme and SMHPC believes its aim is to turn a local affair into an international issue, all the while stalling and discrediting the project. ‘They are whipping up the emotions of local people and trying to scuttle the plans at the last minute,’ Bakre said. ‘It is only now that outsiders from different states, and with an agenda different from the local people, are using arguments to distract and agitate the locals. The people have been quite receptive to the project and it is only recently that vested interests have sought to mislead them, with an eye to the oncoming elections.’

Historical perspective

The Maheshwar project was originally conceived in 1978. By the early 1990s the scheme was languishing due to a lack of government funds, and it was among the first in Madhya Pradesh to be allotted to the private sector. A local Indian business group, S Kumars, acquired the scheme and established SMHPC as a company dedicated to construction of the plant.

S Kumars’ involvement with the Maheshwar dam, their first taste of the hydropower industry, was prompted through the company’s origins which are near the dam site at Indore, and its commitment to development of the region. Bakre commented: ‘It is a matter of pride for the country that indigenous entrepreneurs are taking up the challenge in the area of hydel power. The government had been trying to build this project for years but it has only been through S Kumars’ involvement that it has seen the light of day.’


Bakre’s reference to the challenge of the hydro sector could not be more apt. The company’s involvement in this hydropower scheme, and any statement they make about its progress, is being challenged by the main motivating force behind the Maheshwar demonstrations, NBA. SMHPC says that highly exaggerated claims and intense propaganda appear to be NBA’s tactics.

Such claims include one that the project has ‘severe financial problems’. The cost of the US$436M project is reported to have increased fourfold over the past ten years and companies such as Pacific Corporation, and an unnamed Norwegian company, are said to have dropped out of negotiations due to environmental concerns.

This, the SMHPC says, is propaganda. Pacific Corporation was involved with the scheme, technically and financially, but has now decided to take a back seat. ‘We continue to support the project,’ Dennis Quinn said, ‘but decided to let S Kumars move forward with other partners. This was a corporate decision and the activity of campaigners did not affect this. The Pacific Corporation was comfortable with the project at any given time.’

Bakre added: ‘The project is a complete success in its financing aspects, with regards to both debt and equity. This is the first IPP in India to have achieved significant milestones and is being viewed as a role model in several respects. No Norwegian company has ever been involved with the project but, in contrast, big companies such as Siemens AG of Germany are also investing in it. Indeed the project has achieved several firsts in the field of hydel power financing in India.’ Finance comes from a consortium comprising Industrial Finance Corporation of India, State Bank of India, Power Finance Corporation and Dena Bank. The bulk of foreign currency loans are being provided by Bayerische Vereinsbank of Germany via a 17-year buyer’s credit facility.

Bakre is confident that the SMHPC has maintained a rigid budget. In response to claims that costs have quadrupled, he says that original estimates for the project were made in 1978 when the ruppee was ten to the dollar. Now, with about 40 ruppee to the dollar, and inflation, this has increased project costs. Furthermore, the SMHPC is quite adamant that the project is on the verge of financial closure. If this is the case, what exactly is at the root of such contradictory statements and fierce opposition to the scheme?

The protests, according to Shripad Dharmadhikary from NBA, have been held because the people want the project to be terminated. ‘Their own experience and analysis show that the project is bad,’ he says. ‘However, as a middle ground, they are willing to have the project reviewed comprehensively, with the involvement of the people.’ Such involvement is desired for the most contentious issues of the Maheshwar project – rehabilitation and resettlement (R&R) and the benefits of the scheme.

Responsibility for R&R has been contracted out to Madhya Pradesh State Electricity Board (MPEB) who, NBA claims, has little experience of such work and is not resettling people according to official policies. In contrast, Bakre described the MPEB as an experienced government agency which has been working on the project and with citizens of the local area since 1978. ‘The MPEB is familiar to the local populace and has expertise in this field of work as a result of its earlier projects,’ he adds. Furthermore, SMHPC says its R&R policy is a comprehensive and scientific package for rehabilitation but ‘outsiders’ are preventing it from being communicated to the local people. Land that has so far been acquired for the project has been obtained legally from voluntary sellers and proper compensation has been paid as per the Government of Madhya Pradesh norms.

SMHPC stresses that as local entrepreneurs based in the region, the company has the interests of the local people at heart ‘The project company is sensitive to the psychological, social and material impacts of displacement, no matter how small its scale.’ Bakre says. ‘The whole exercise of R&R is geared towards ensuring minimum inconvenience and dislocation.’

SMHPC says some of those spearheading the agitation have vested interests. ‘These people,’ Bakre claims, ‘are prosperous landowners who realize that the project R&R, by providing land for the local landless, would deprive them of exploiting the poor local labour. In fact, the NBA should understand that it is supporting the cause of the rich feudals of the area, who want to preserve the status quo and retain cheap labour in line with age old tradition. It is unfortunate that the NBA is preventing benefits from accruing to local people and is supporting the cause of the wealthy few.’

Ultimately, NBA claims, the project will not benefit the local people: SMHPC disagrees vehemently. ‘The land and villages coming under submergence are situated on the banks of the river which, from time to time, are flooded due to the high water conditions that prevail in the wet season,’ Bakre explains. ‘The Maheshwar project will save the villagers from this agonising yearly ritual by reining in the turbulent waters. ’

SMHPC goes on to discuss how the company will provide model townships in the area and assist local people in obtaining qualifications, vocational training and establishing small businesses. They will also supply better varieties of seeds for farmers and give them training in progressive agricultural practices. The company claims it is seeking to help the people sustain a better quality of life. ‘These are all opportunities which are not available now,’ Bakre says.

The project will generate 400MW of much-needed peaking electricity for India’s western grid. In this context, SMHPC believes that the project is more than justified. ‘India has a massive energy demand,’ Bakre explains, ‘hydropower is the most environmentally benign and friendly form of energy available. We want to give the project a chance, to make people understand the reality of life and what India as a country needs.’

Effective communication

In an attempt to defuse the situation and satisfy both parties, the first step in a consultative process took place on 15 January.

Following the infiltration of the dam site the Deputy Chief Minister of the Madhya Pradesh state called a meeting attended by both NBA and SMHPC. The outcome was that SMHPC asked the state to intervene, to ensure a ‘peaceful position’ is achieved at the dam site. ‘We do not want to participate in an unhappy situation,’ Bakre said. ‘We have to work in this area and we will leave this situation to the state government.’ At the meeting, according to NBA’s Dharmadhikary, the Deputy Chief Minister said SMHPC had to create trust in the people, with the urgent need to set up dialogue. NBA also made it clear that the occupation and agitation will continue until the state government reviews the whole project.

In reply, SMHPC has since met with NBA at the site. ‘We pointed out that we are very much in favour of development of the local area,’ Bakre said, ‘and in favour of consultative mechanisms whereby differences in opinions can be ironed out.’

The eco-bandwagon

No one knows how long it will take to iron out these differences but, as SMHPC points out, time is money and delays will provide more ammunition for the NBA, who will point to increasing project costs. Construction of the power house is stalled but work is continuing at the settlement sites. Some protesters still remain at the site, vowing to maintain a vigil until their demands are met.

‘Our endeavour,’ Bakre commented, ‘is to solve matters peacefully and to the satisfaction of the project-affected people.’ This, the goal for both sides of the Maheshwar debate, will not be an easy task if exaggerated claims and propaganda remain. Clear, factual communication is needed to achieve a balance between environmental concerns and hydropower development.

‘We thought consideration would have to be given to these problems,’ Dennis Quinn said, when reflecting on the demonstration, ‘but we thought, and still believe, that it is something the consortium can work through.’

Just how these problems will be ‘worked through’ remains to be seen. In the meantime, all eyes are on the the eco-bandwagon as it picks up speed through the Narmada valley. Real issues which affect local people have to be addressed at Maheshwar, to ensure that hydropower does not get taken for a ride.