Did You Know?
Export credit agencies have backed inefficient and intrusive power plants and dams across India. The Dabhol power plant cost the government of India in power fees and lawsuit settlements, while still being unable to provide dependable power to Maharashtra. Dams, such as the Tehri Dam, flood nearby dams and hardly follow environmental recommendations. India has two ECAs of its own; the Export Credit Guarantee Corporation of India Ltd., and the Ex-Im Bank of India.
"In the case of the Dabhol Power project, the Dabhol Power Company has facilitated human rights abuses by the state, has benefited from them, and has also benefited from a failure of the government to enforce human rights standards."
- Human Rights Watch 1999 Report
|Photo Credit: Human Rights Watch
Important Background Documents:
The Road to Harsud: The death of a town July 19, 2004 (Outlook India, via ZNet) by Arundhati Roy — In this opinion piece Roy draws attention to Harsud, a 700-year-old Indian town slated to be submerged by the reservoir of the Narmada Sagar Dam, the most destructive dam on that river. She gives a narrative to the struggle of communities in the face of a corrupt government-sponsored energy industry. Saying "[t]he World Bank is by no means the only shark in the water," she cites ECAs COFACE (France) and NEXI & JBIC (Japan) among those bringing destructive energy projects to India.
The Sustainable Energy and Economy Network (SEEN) page on India's multilateral bank and ECA-backed energy projects.
At What Cost? ECAs in India: Bankrolling Nuclear Power Plants, Mega-Dams, and Scandal-Ridden Projects Jan. 2004 by Stephanie Fried, Ph.D., and Josh Dimon, Environmental Defense
In 1992, Enron established the Dabhol Power Company (DPC) in Maharashtra, India, in association with GE and Bechtel. Financing for the plant came from a $640 million loan fro US EXIM and OPIC, as well as additional funding from JBIC and Belgium’s OND. The UK’s ECGD provided investment insurance to three British banks involved in the project. The government of Maharashtra agreed to allow construction of the first phase of the plant, and the Maharashtra State Electricity Board (MSEB) agreed to purchase its electricity through a Power Purchase Agreement. A report by the Munde Committee described the bribery behind the deal between the DPC and MSEB, the inflated cost of the plant’s construction, and the unreasonable rates charged to the MSEB during operation of the 740 MW Phase I of the DPC’s existence. Despite these problems, the government agreed to do an additional 1,400 MW Phase II of the Dabhol plant. Local people protested the activities of the DPC throughout its entire operation. In 1997, tension between the government and its people peaked as protestors took to the streets, often beaten by the police. Operation costs of the plant increased as Phase II progressed. In 2001, the MSEB could no longer afford to patronize the DPC and withdrew its support. Dabhol was soon forced to halt operations. The DPC was in debt to Indian and foreign banks, including export credit agencies. At the end of that year, Enron declared bankruptcy. Enron, GE, and Bechtel sued the government of Maharashtra for reneging on its contract. OPIC also held the government responsible for their loss of investment. Enron slowly faded out of the picture as GE and Bechtel continued to demand money to remove the DPC from debt. Now, as Phase II approaches completion, GE and Bechtel are removing themselves from the operation, leaving Indian investors and the MSEB with a plant which consumes a large amount of money to operate and does not yet provide the area with sufficient energy.
Dam Projects Summary:
India relies on dams to generate hydroelectric power and to control relative water distributions across the country. Often these dams come at the price of displacement of India’s people or flooding of fertile land. Development of one such dam in Uttaranchal by the Tehri Hydro Development Corporation (THDC) began in 1972 with support by the German ECA, Hermes. Since then, construction of the dam has been reprimanded in court for its disregard for environmental guidelines and necessary seismic revisions. The dam lies in close proximity to the Central Himalayan Seismic Zone and is in danger of being directly damaged by an earthquake or indirectly by landslides and waves caused by quakes. A landslide caused by the flooded Bhagirathi River collapsed a bypass tunnel of the dam, killing at least 28 people in August 2004. In addition to these safety issues, the THDC and the government of Uttaranchal have not provided adequate compensation to the thousands of people to be displaced by the dam. Problems associated with dam projects have caused Hermes and other German banks to withdraw support from Maheshwar dam in the Naramada Valley.
Indian Ex-Im Bank Becoming Active in Africa September 9, 2005 (Our Corporate Bureau)
Dabhol Settlement Receives Another Blow May 24, 2005
Indian Lenders, OPIC Sign MOU on Dabhol Debt March 15, 2005
Russian and Indian ECAs Enter Into Agreement November 18, 2004
OPIC Sues Indian Government Over Dabhol November 19, 2004
Dabhol Standoff Continues September 21, 2004
OPIC to Search for Dabhol Power Plant Sponsor August 19, 2004
Large Dam in India's North East May Get ECA Financing June 19, 2004
JBIC Extends Financing to India March 31, 2004
more information, contact the
ECA Watch Facilitator.
ECA Watch Campaign Member Links:
Environment Support Group, Leo Saldanha
Narmada Bachao Andolan (NBA) - Save the Narmada Movement, Alok Agarwal - www.narmada.org/nba-press-releases/