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dam-l (Fwd) PR: German Utilities Quit Maheshwar Dam




------- Forwarded Message Follows -------
Date sent:      	Wed, 21 Apr 1999 13:53:18 -0800
From:           	patrick@irn.org (Patrick McCully)
Subject:        	PR: German Utilities Quit Maheshwar Dam
To:             	irn-narmada@igc.apc.org

                                     URGEWALD
                                     INTERNATIONAL RIVERS NETWORK

                                     PRESS RELEASE

Wednesday, 21 APRIL 1999
Heffa Schücking, Urgewald +49 2583 1031
Patrick McCully, IRN +1 510 848 1155

                         GERMAN UTILITIES QUIT CONTROVERSIAL 
INDIAN DAM
                         COMMUNITY LEADERS ON INDEFINITE 
HUNGER STRIKE

India's controversial Maheshwar Dam is once more in crisis as two 
major
partners in the project, German utilities Bayernwerk and Vereinigte
Elektrizitätswerke Westfalen (VEW), stated this week they will no longer
invest in the dam. The utilities together would have aquired 49% of the
equity in the dam which is being built across the Narmada River in the
central Indian state of Madhya Pradesh.

The utilities' withdrawal comes as seven community leaders - five from
villages to be drowned by Maheshwar - enter the eleventh day of an
indefinite hunger strike in protest against dams in the Narmada Valley.
The hunger strikers are among 500 farmers and fishers who have been camped
out since April 7 in front of the residence of Digvijay Singh, Chief
Minister of Madhya Pradesh. [1]

In 1993 the Madhya Pradesh government gave the concession for Maheshwar
Dam to an Indian textile company, S. Kumars, which then formed the Shree
Maheshwar Hydropower Corporation (SMHPC) to build and operate the project.
Oregon-based utility PacifiCorp was the original foreign equity holder in
SMHPC but withdrew in May 1988 stating concerns over social impacts and
local opposition. PacifiCorp's stake in SMHPC was then taken over by
Bayernwerk and VEW.

Dr. Joachim Adams, President of VEW's Board, has stated that "VEW is no
longer involved in Maheshwar and is not planning to become involved in the
future". A spokesperson for Bayernwerk noted, "Our contracts with the
SMHPC have run out. We would only be willing to consider involvement in
the project anew if the authorities are able to provide land-for-land
resettlement, with land of sufficient quality as per the conditions of the
Madhya Pradesh State rehabilitation policy for the Narmada Projects".

Although no reliable surveys exist it is believed that Maheshwar Dam would
displace over 20,000 people in one of India's most prosperous agricultural
regions. No credible plan exists for providing these people with
replacement land or livelihoods. Fierce local opposition to the project
has resulted in a number of dam site occupations and numerous beatings and
arrests at the hands of the police.

A broad coalition of 120 German non-governmental organizations (NGOs) had
urged German companies involved to respect the wishes of project-affected
people and withdraw. In December 1998, a German environment and
human-rights organisation, Urgewald, undertook an on-site investigation of
the project. An English summary of its report has just been released. [2]

During its investigation, Urgewald visited ten villages in the submergence
zone of the dam and met with the project promoter, S. Kumars, and the
state agency responsible for resettlement.

"What we found was a total lack of credible resettlement planning, a
shocking disregard for the truth in project documents, and systematic
violations of the rights of affected people. In effect, there is no land
available for rehabilitation. The lands being offered either lie in the
submergence zone of the dam or already belong to other communities," says
Ms Heffa Schücking of Urgewald.

Urgewald's report also questions the economic viability of the Maheshwar
project. It describes in detail the thriving economy of the project area
and concludes: "If a cost-benefit analysis were based on the true costs of
replacing the assets and livelihoods of these communities, it is our firm
conviction that this project could no longer be considered economically
viable".

"We are pleased to note that our investigation helped convince German
utility companies to withdraw" adds Ms Schücking.

The withdrawal of VEW and Bayernwerk still leaves a number of foreign
companies involved in Maheshwar. German engineering multinational Siemens
is still committed to contributing a non-voting share of 17% of project
equity in return for a contract to provide turbines and generators.
Swiss-Swedish firm ABB is also to provide generating equipment.

Almost half of the financing for Maheshwar was to be provided by the
German HypoVereinsbank through a $257 million export loan. The Siemens and
HypoVereinsbank participation has been thrown into question by the
utilities' withdrawal and the fact that preliminary commitments from the
German government to provide export credit and investment guarantees for
Maheshwar have become void.

"In view of the severe negative impacts of the project, we think it is
unlikely that the German government would grant a new guarantee", explains
Ms. Schücking. In its coalition agreement the new German government has
made a commitment to introduce environmental, social and developmental
criteria for the approval of export credit guarantees.

Mr Alok Agarwal of the Narmada Bachao Andolan (Save the Narmada Movement)
says: "Large dams are very risky ventures and rightfully have trouble
attracting foreign investors. In the case of the Narmada Valley this is
even more true, because of the strength of people's resistance to these
projects. The ongoing fast in Bhopal is thus not only a signal to the
Government of Madhya Pradesh, but also a warning to foreign companies to
stay away from destructive projects in the Narmada Valley".

"The withdrawal of PacifiCorp, VEW and Bayernwerk and the ongoing protests
in India should provide a clear warning to Siemens, ABB, HypoVereinsbank
and any other potential foreign investors to stay well clear of the
Maheshwar Dam", says Mr Patrick McCully, Campaigns Director of the
Berkeley-International Rivers Network (IRN).

"Any foreign investor which gets involved in dams in the Narmada Valley is
going to risk international censure as well as lose money," adds McCully.

Maheshwar 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. Due to massive protests in the Valley, 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.

                                     -- ends --

Notes
[1] The protesters are demanding that the Madhya Pradesh government halt
construction on Maheshwar until the completion of a comprehensive and
participatory review of the costs, benefits and alternatives to the
project. These actions have been recommended by a task force established
by the Madhya Pradesh government in early 1998 to review the Narmada
Valley Projects and prepare a framework of alternatives for the
development of water and energy resources in the valley. The Task Force
submitted an overall report in January 1999 and a separate report on
Maheshwar in October 1998. The reports acknowledge the grave resettlement
situation and recommend a completely different approach to the development
of water and energy resources. They also recommend that no projects should
be carried out in which resettlement and environmental protection cannot
be ensured. [2] 'The Maheshwar Dam in India: A Travel Report', Heffa
Schücking, Urgewald, March 1999.

For more information contact:
Heffa Schücking, Urgewald:
Tel: (49)-2583-1031
Fax: (49)-2583-4220
Email: urgewald@koeln.netsurf.de

Patrick McCully, International Rivers Network
Tel. +1 510 848 1155
Fax. +1 510 848 1008
Email: patrick@irn.org
http://www.irn.org/programs/narmada/index.html


Dianne Murray, Coordinator/Webmistress
Dam-Reservoir Working Group; Ottawa, Canada
Dam-Reservoir Impacts and Information Archive
http://www.sandelman.ottawa.on.ca/dams