A trail of broken promises in Dabhol

A trail of broken promises in Dabhol

Dabhol (Maharshtra): High-profile power projects in the Ratnagiri district of Maharashtra seem to be jinxed. Much before the current protests in Jaitapur over the construction of a proposed nuclear power plant erupted, a similar agitation took place in May 1995 in Ratnagiri at Dabhol, where a gas-based power plant was being built by the US-based Enron Corp.

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The 1,940-megawatt (MW) gas-based power project at Dabhol, around 280 km from Mumbai, entailed India’s largest foreign investment at the time. Enron has since gone bankrupt and become a widely accepted symbol of wilful corporate fraud.

Also See | Unkept Promises (PDF)

The present situation on the ground, a decade after Enron went belly up and abandoned its India plans, is one of promises half-kept. Development initiatives started by Enron died prematurely with the company’s exit in 2001 as the current operators of the project, state-run Gail (India) Ltd and NTPC Ltd, didn’t continue with them.

The project has since been renamed Ratnagiri Gas and Power Pvt. Ltd (RGPPL). The plant structure is located a stone’s throw from the Arabian Sea, with its chimneys and cooling towers visible from a distance.

Close to it lies a gated and landscaped community for the management at RGPPL, probably the legacy of the project’s original promoters.

While some signs of activity at this complex are visible from the outside, a hospital situated a few metres away lies desolate. What appears to have been manicured gardens within the sprawling campus in which the medical facility stands are now overgrown with weeds. Locals said that the sandstone structure was to be a healthcare facility for the local population, many of whom were to get jobs at the plant.

Yashwant Bait, head of the Katalwadi village council, alleges that not only did development projects like the hospital end abruptly, villagers who lost their land to the project did not receive the full compensation entitled to them and only a paltry few got jobs, and that too on contract.

“Fifteen years after the project first started, we feel cheated as we were not given the compensation that was promised and hardly any locals got jobs," said Bait, who was a part of the agitation against the project during the mid-1990s.

Bait, who gave up 5.66 ha of land for the project, received his compensation as late as in 2003. “I got 500,000, which included interest for the delay. It works out to only 80% of what I should have got," said Bait, who recently retired from his services at Bank of Baroda and now cultivates paddy.

Out of around 2,735 farmers who lost land and were eligible for employment at the site, only 200 got jobs, Bait said.

Praveen Bhor is one of the villagers to have secured a job at the site as a gardener. “I am one of the lucky few, but even my job is temporary. We have moved court against the company, demanding permanent jobs," Bhor said.

Water pollution

Another problem faced by the project-affected villages such as Katalwadi, Veldur, Anjanvel and Ranvee is that of water pollution.

Snehal Vaidya, who was till recently the Anjanvel village council head, said that the first instance of water pollution in the area dates back to December 1998. At that time, the first phase of the power plant was burning naphtha as fuel. “We proved to Maharashtra Pollution Control Board (MPCB) officials that the local water was contaminated with traces of naphtha, but no action was taken," Vaidya said.

She also observes that there was no problem of water pollution in the interim five years in which the project lay defunct, but it resurfaced in 2007 when RGPPL resumed the project. “The problem still persists and we have to get water supply from tankers," said Vaidya.

Not only does the local populace complain of unfulfilled promises, Enron’s departure from Dabhol led to a situation where the plant itself has not quite been the solution to the state’s energy needs that it was expected to be.

The revival of the Dabhol project was necessary for Maharashtra, which suffered from a power deficit of 4,500-5,000 MW till 2010. The project was strategic for the state administration to maintain power grid stability. All the major power projects are in the eastern part of Maharashtra (Vidarbha region), but the demand is greater in the industrialised western part. The Dabhol plant is useful in maintaining supply in case of a disruption of power transmission from the plants in the eastern part.

Subrath Ratho, secretary of the department of energy in the Maharashtra government, concurs that design and financial settlement issues with the lenders and original minority shareholders of the project- General Electric Co. (GE) and Bechtel Corp.-were stumbling blocks in reviving it. GE provided the turbines for the plant and Bechtel was in charge of engineering and project management.

When Enron left the site, it took with it all the documentation that contained information about the design of the plant, said a senior RGPPL official who was involved in the revival process. He did not want to be identified as he is not authorised to speak to the media.

First challenge

“The first challenge was to clear the wild vegetation that had grown all over the area," this official said. “Some parts of the project were damaged and we had to identify the phase that was least affected out of three and could be easily revived. We zeroed in on phase II of the plant, but no original documentation was available; that made the task complex."

Finally in April 2006, the current management was able to restart generation from one unit of 320 MW using naphtha as fuel. RGPPL generates around 1,850 MW of gas-based power at Dabhol currently.

Till recently, some units within the plant would experience frequent breakdowns that the official cited earlier attributed to a reluctance on the part of GE to sign a maintenance contract with RGPPL for the Dabhol plant.

“GE wanted RGPPL to sign a non-disclosure agreement regarding the details of the maintenance contract, which RGPPL could not as it was a public entity," the official said.

In June 2009, after the Indian government’s intervention, the maintenance contract with GE was finally signed. Each of the three phases are going through a refitting and modification process one after the other and RGPPL expects the project to be fully revived by August.

“Revival of the Dabhol project has cost taxpayers around 12,000 crore including settlement with GE and Bechtel and the lenders. The mistake the government made was to not buy out Enron’s assets when it was going through bankruptcy and opting for a costly settlement process," said Shantanu Dixit, a member of Paryas Energy Group, a Pune-based organisation that researches on energy policy.

Silver lining

There is a sliver lining to the challenges that have dogged the Dabhol project when Enron was associated with it, analysts said.

“The biggest learning from Dabhol was to move away from negotiated power purchase agreements to competitive bidding," said Kameswara Rao, head of the government and infrastructure practice at international audit and consulting firm PricewaterhouseCoopers. “This brought efficiencies into the Indian power sector in terms of sourcing equipment, fuel and arranging finances."

Vaidya, however, admits that the project has brought certain benefits to the region as well. The Dabhol power plant is a source of substantial income for the project-affected villages in the form of property tax. From an annual income of not more than 50,000-200,000 a year, the Anjanvel village council now receives 1.27 crore in taxes from RGPPL every year, Vaidya said.

“When I was the sarpanch (village head) this money was utilised to improve public amenities such as construction of lavatories, improving the village school and implementing a water distribution scheme," Vaidya said.

Her husband Vidyadhar Vaidya points out to some two-storeyed houses that have come up in the vicinity and explains that many residents of the area used the compensation money to improve their quality of life.

Arguments against nuclear power aside, had the Dabhol project continued without disruption and led to the promised acceleration of local development, the people of Jaitapur may have been better disposed to allowing it to come up in their backyard. As things stand, while events in Japan have heightened emotions, there is no enthusiasm for projects that so signally fail to deliver on pledges.