Introduction to Project History
In the early 1990’s, the Indian Government committed itself to a World Bank – International Monetary Fund inspired economic liberalisation programme as part of its New Economic Policy (NEP). The Indian power sector was amongst the first to be “liberalised”. Official pronouncements at the time had suggested that this programme would usher in a new era of economic growth, efficiency, public accountability, transparency, “open”, democratic and “less corrupt” governance. Through a process of privatisation, Trans-National Corporations (TNC’s) were to be actively approached and invited to present a lead in instilling “model” ethical codes of conduct in various sectors of the economy, including that of power generation, transmission and distribution.
A select list of eight Independent Power Producers involving foreign direct investment (FDI) were identified by the Government of India as “fast track” projects, and thus given the extraordinary benefit of business risk absolution normally attendant to such investments. This involved extension of sovereign counter-guarantee, a special cover wherein the Union Government agreed to pay up dues in the event the State Electricity Boards failed to cover the cost of power supplied. Further, investors were assured of early statutory clearances. Such irregular processes were claimed necessary for encouraging FDI in a resource poor, energy deficient country, and in order to invite the best of foreign utilities to come in and save the country from certain disaster, if not doom.
The devastating experience of the Maharashtra State with the Enron sponsored Dabhol Power Company is an infamous of case where an ugly nexus of TNC and the State has forced a very heavy and unsustainable burden on the public at large, and demonstrated the failure of the “reforms” process. The debilitating blow that this one project has delivered on the economic future of the State is only now being fully appreciated, and quite ironically, proving right those who had staunchly opposed the project.
The South Indian State of Karnataka was very close to reliving the experience of Maharashtra State, but for the effective, and finally successful, public action against only the second “fast track” deal. In this case, the investment was from insignificantly small and unknown power utility from USA, Cogentrix Inc. of North Carolina.
Cogentrix proposed its US $ 1.3 billion coal-fired thermal power station of 1,000 MW capacity in the ecologically and culturally sensitive and coastal Dakshina Kannada region as a “model” for India’s new private power policy. Cogentrix’s model stance, one was informed, extended towards understanding that its “customers extend(ed) beyond its end users alone to include employees…..people living in communities where its operating facilities are or will be located….and the environment that is shared by all. To that end Cogentrix remains steadfast in its commitment to operate at production levels that are the envy of the electric power industry while protecting the environment”.
Quite in contrast, and as is evidenced in this case, every act of the company has worked to weaken, thwart or deem redundant, the democratic control of local communities and elected bodies over their resources, their due access to decision making processes and their fundamental rights. This even as Cogentrix and its partners, initially General Electric and later China Light and Power of Hong Kong, with the support of the Karnataka and Indian Governments, and the rather brash interference of the US Government, sought to benefit immensely by undermining larger public interest concerns including economic, environmental, social and cultural rights.
Presented below is our case against Mangalore Power Company, till recently a joint venture advanced by Cogentrix Inc. of USA and China Light and Power of Hong Kong.
The location of power stations in Dakshina Kannada region
The location of thermal power stations in the environmentally and culturally sensitive Dakshina Kannada region of Karnataka State was originally initiated in 1988 at the behest of the Karnataka Government. The location of power stations in the villages of Nandikur, Padubidri, Nadsal, Yellur, Hejmadi, Palimar, Padebettu and Thenka villages was initiated under the Land Acquisition Act of India. The basis for proposing location of power plants here was the Chockalingam Report commissioned by the Karnataka Power Corporation Limited, which essentially justified such location by describing these villages as constituting degraded lands.
Initially, the State held Karnataka Power Corporation Ltd. proposed a 1,920 MW coal fired power plant here, but was unable to proceed due to local opposition and infeasibility. It had to withdraw without breaking ground. Soon after, the Government of India enterprise of National Thermal Power Corporation (hereinafter NTPC) proposed another coal fired thermal power station in the same location of a capacity of 2,400 MW, and with the techno-economic support of erstwhile USSR Government. This was actively resisted by the local project affected communities under the banner of the Janajagriti Samithi of Nandikur, a registered society representing the cause of the affected communities. Such action was achieved initially through the channels of administration and political decision making at both the State and Union Government levels. On failing to get the attention of the Government to their genuine concerns, the Samithi then approached the High Court of Karnataka in a Public Interest Litigation (hereinafter PIL).
The High Court summarily dismissed all their concerns, but on an appeal to the Supreme Court of India, it was noted with satisfaction that given the position of the State of Karnataka and the NTPC that the project would not be proceeded with until all the necessary clearances were obtained, “no further order was necessary”. During this process NTPC invested in various preliminary structures much against the wishes of the local community. It also initiated a Comprehensive Environmental Impact Assessment (EIA) and Environmental Management Plan Report. Even before the EIA was taken up for review, the project became infeasible in view of delays due to local opposition, and the lack of techno-economic support as USSR disintegrated. NTPC withdrew from the project during 1991.
Consequent to the liberalisation of Indian economy, the Karnataka Government decided to shop around for projects early on and decided on inviting Cogentrix Inc of USA, to establish a power plant near Bangalore. This decision was taken during a two-week long world tour of the then Karnataka Chief Minister, Shri. S. Bangarappa, and his entourage of bureaucrats. This decision was extremely controversial as the rationale for inviting Cogentrix was primarily questioned both in terms of the process of the decision taken and the candidate identified. Despite such opposition to the deal, the project was pushed through various stages of clearances, in blatant violation of the law and against public opinion. Cogentrix which first had plans of developing a 500 MW plant near Bangalore, Karnataka’s capital city and the destination for the power produced, decided to relocate to near Mangalore, the prime city of Dakshina Kannada region. The specific location chosen was Nandikur and surrounding villages, a decision largely influenced by the awareness of Land Acquisition Act already being in force here, as the same had not been revoked even after the exit of KPCL and NTPC projects. Further, the company sought to benefit from the previously distorted site clearance as well.
The local communities resisted this decision as they had in the past, the other power projects. Rather than allowing for their opinion to be voiced, heard and considered, the Karnataka Government proceeded to grant various environmental clearances without following due process. There was widespread public opposition to such decisions across the Dakshina Kannada region and protests were raised as well in the State Assembly and the Indian Parliament. Despite which the Union Government proceeded to accord the project final environmental clearance during June 1996. The primary actor pushing for such clearances during the years 1995-96 was the Karnataka Chief Minister Devegowda, who became Prime Minister of India during 1996 for a short period of eleven months.
An even more controversial feature of the project was the Power Purchase Agreement (hereinafter PPA), which was wrapped in complete secrecy, and only made public after a series of protests and consequent adjournments in the Karnataka Legislature. The PPA revealed the high cost of power and as well the blatantly contemptuous manner of the project proponents in addressing the due Rights of the people. A particularly repulsive clause in the PPA included absolution of all risks to the company in the event of an accident and impact on human health and environment. This clause was subsequently amended after wide protests that drew references to the experiences of affected communities with Union Carbide in Bhopal.
At an early stage, a review of the PPA by leading international consultants initiated by the Energy Department of Karnataka Sate, had pointed out that the project cost was extremely expensive, all risks were borne by the State Electricity Board and the technology used suspect. The State Government deliberately suppressed this report.
Following the accord of the environmental clearance in 11 June 1996, within days of Devegowda assuming charge as Prime Minister, specific allegations of corruption were made against him by a Member of Parliament from his party, Smt. Maneka Gandhi (presently Minister of State for Social Justice and Empowerment in the Union Government). Smt. Gandhi was immediately expelled from the Janata Dal party for this charge. Soon after, an Opposition Member of Parliament George Fernandes (presently Union Defence Minister) leveled more specific charges of corruption in the deal against Devegowda, and even moved a privilege motion against him in the Parliament. The motion was not allowed, but the situation precipitated a crisis for the Prime Minister that eventually resulted in his resignation less than a year later.
In the context of these developments, Janajagriti Samithi initiated a PIL against the project in the High Court of Karnataka during 1996. The PIL prayed for quashing of the environmental clearances granted on the grounds that it violated the Fundamental Rights of the communities to Life and Livelihood as articulated in the Constitution of India, and various International Treaties. Soon after Maneka Gandhi initiated proceedings in the Supreme Court of India against the project on grounds that the clearances accorded were in violation of coastal environmental norms. On the basis of this petition, the Supreme Court ordered a review of the project within the framework of the criteria for “sustainable development”, and compliance with environmental norms. They charged the National Environmental Engineering and Research Institute (hereinafter NEERI), an independent research centre of the Government of India, to conduct this study. NEERI submitted its report to the Supreme Court in November 1996 stating that the project and the clearances accorded failed to comply with the grounds prescribed by the Supreme Court of India and the law on the matter.
- CogentTricks Against People’s Rights, A case against Mangalore Power Company, a joint venture initiative (till recently) of Cogentrix Inc. of USA and China Light and Power of Hong Kong
 Mangalore Power Company brochure, 1997.
 Janajagriti Samithi vs Union of India, SLP No. 17396-97/91
 Page 106 of the Power Purchase Agreement between Mangalore Power Company and the Karnataka state Electricity Board, 1994.
 The review was conducted by the Science Application International Centre of USA, Gopa Consultants of Germany and Tata Energy Research Institute of India for a cost of US $ 100,000 of taxpayers money. The report came to public notice on the effort of the first author.
 IA 21 in W. P. (Civil) No. 664/1993 in the Supreme Court of India.