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dam-l LS: Siemens under scrutiny Over Maheshwar Project



Source: The Times of India, March 8, 2000

               Siemens under scrutiny over power project

               By Manik Mehta

               FRANKFURT: A hydro-electric project in Maheshwar in
               the Narmada Valley, in which German multinational
               Siemens is involved, faces extensive scrutiny following
               allegations that the company had not conformed to
               guidelines set by the German government for providing
               guarantees.

               An independent German organisation, Urgewald, which
               monitors progress of developing nations, has alleged that
               Siemens wilfully gave wrong information in its application
               for official German guarantees and had thus violated the
               guidelines of the Hermes export credit insurance. It has
               asked the German government to reject Siemens' plea for a
               guarantee.

               Urgewald also claimed that the protests at the site of the
               dam, which allegedly threatened the existence of 40,000
               peasants faced with eviction from their dwellings around the
               site, had once again flared up.

               Siemens will be supplying components valued at $175
               million for the planned power station. The German
               multinational, which has business interests ranging from the
               energy sector to telecommunications, is keen to tap India's
               "colossal energy demand".

               Urgewald alleged that Siemens had the turbines and
               generators for the project manufactured in Russia. As a
               result, a "substantial part of the supplies to be made" were
               not of German origin, a condition for the Hermes guarantee,
               an Urgewald spokeswoman said.

               The Hermes guidelines state that "export guarantees can be
               undertaken only if the services (including parts, components
               or products) are largely of domestic (German) origin".
               Foreign supplies can "make up a share of 10 per cent."

               Wolfgang Breyer, Siemens' spokesman, dismissed the
               allegations. He, however, confirmed that large parts of 10
               turbines and generators meant for the Maheshwar project
               are to be manufactured by companies in St Petersburg,
               Russia. Siemens has minority stake in the Russian
               companies LMZ and Elektrosila which manufacture
               generators and turbines.

               Supplies of non-German origin would account for at the
               most a quarter of the total supplies envisaged under the
               entire contract, which will also include transformers, switch
               systems and engineering services, Breyer said. He pointed
               out that the non-German component was necessary
               because Siemens would otherwise not be able to compete
               against international bidders, given the extremely high cost
               of production in Germany.

               In 1997, the German government signalled its agreement to
               provide a tentative coverage for the Siemens project, but
               final approval for the guarantee has not been issued.
               Berlin-based government sources said on condition of
               anonymity that there had been wrangling between two
               different ministries represented in an inter-ministerial
               committee set up to clear the project. The economic
               ministry supports the Hermes guarantees whereas the
               ministry for economic cooperation, which oversees aid to
               developing countries, is against it, they said. The ministry for
               economic cooperation has taken a tough stand against India
               and frozen aid since the nuclear tests of 1998.

               However, Urgewald said it is concerned over another
               aspect. Siemens has been assuring that the resettlement of
               23 villages in the region is making headway and a
               committee comprising representatives of the local
               population is monitoring whether the "compensation is
               functioning''.

               However, Urgewald alleged that "not a single Indian family"
               had so far been compensated with any alternative land.
               Repesentatives of the affected population, according to it,
               had also not been included in the monitoring committee.
               (IANS)