Wednesday, July 6, 2016

Nitin Sethi - Environment ministry's false defense of Adani Rs 200 crore waiver

Nitin Sethi writes: The environment ministry put out a rejoinder on the story about govt waiving off Rs 200 crore of penalty against Adani. The company too had a polite response. Both of these responses fall flat in the face of facts. Here is how:

The Ministry of Environment, Forests and Climate Change has stated that the inference drawn by a report published in Business Standard on July 2 ("Govt cancels Rs 200-crore green fine on Adani") is not correct. In a rejoinder issued last week, the ministry said the National Democratic Alliance (NDA) government had not cancelled the fine of Rs 200 crore.

The fact, according to the ministry, was that the ministry had in April 2014 noted that its show-cause notice for the creation of the Environment Relief Fund (ERF) was not backed by any law under the Environment (Protection) Act, 1986, or EP Act and was not legally correct. The government under the United Progressive Alliance (UPA) in 2013 had issued a show-cause notice to Adani Port and SEZ Ltd, based on a report by a Sunita Narain-headed Committee for creation of ERF at the rate of one per cent of the project cost or Rs 200 crore, whichever was higher, for remediation of environment damage in Mundra, for protection of marine ecology, mangroves and restoration of creeks, etc.

However, the ministry has pointed out that the government in April 2014 made a noting declaring creation of ERF as not supported by any law and, therefore, it noted that ERF is not legally correct. The ministry has added that "in September 2015, the government under the National Democratic Alliance, after having satisfied with the necessity to undertake restoration of degraded environmental components and further conservation as recommended by the Sunita Narain Committee, directed for more stringent conditions with open-ended financial commitment by APSEZL for financing the study; restoration and integrated conservation for protection of creeks, mangrove areas, conservation of Bocha island".

This decision of the ministry, according to the government, is much more stringent than asking for Rs 200 crore from APSEZL because, in this case, whatever has been recommended by the Sunita Narain Committee for damage restoration and further conservation has to be borne by APSEZL, which otherwise was limited to Rs 200 crore.

"It is amply clear that MoEF&CC has not withdrawn its demand for Rs 200-crore restoration fund. This government has passed an order in a legally correct framework and also imposed more serious responsibility upon the project proponent without any cost limit," the clarification said.

In a separate response to the Business Standard report, a spokesperson of the Adani group said it abides by the decisions of the authorities and always upholds the law of the land in every part of the world, including in India. In this case, the company said the fact is no final decision on the matter was ever conveyed to the company by the ministry concerned under the previous government. "We had already submitted our reply as required under law to the concerned authorities earlier and made our stand clear," the company has clarified. It has further stated,

"We understand from some other media reports, which quote an official statement from the concerned ministry, that no such decision as reported by you has been taken. Which means the basis of the story is perhaps erroneous."
Business Standard stands by the report, which was based on official documents showing that in its final order, the ministry had withdrawn the demand and concluded that the upfront payment of Rs 200 crore as Environment Restoration Fund for violations and damage done was not permitted under the Environment Protection Act.

Consequent to this order, the penalty that could be imposed on any confirmation of violation in the future is a maximum of Rs 1 lakh. Also, official file notings show that the ministry under the NDA government reconfirmed the damage to the site area. But differing from the UPA government, it internally concluded that there was no proof that existing damage had been caused by Adani.

Consequently, it did not impose a condition requiring either an upfront fund of Rs 200 crore or any penalty under the law for any existing damage or proven violations before giving the clearance, and instead asked it to pay only for conservation plans to be drawn up in future after the clearance. The final orders do not either fix a quantum of sum or a time by which the plans would be put in place.

It must be noted that the recommendation was made by a director-rank officer in April 2014 during the UPA government. But under the NDA government in December, his senior, the special secretary in-charge, restored the demand for the Rs 200-crore fund. The special secretary's views were not accepted by the ministry while passing the final order in September 2015.

Govt cancels Rs 200-crore green fine on Adani
The Union environment ministry has withdrawn its demand for a Rs 200 crore restoration fund from Adani Ports & SEZ for damage to the environment imposed during the United Progressive Alliance (UPA) government, the biggest penalty for green violations.
The ministry also extended the environmental clearance issued in 2009 to the company’s waterfront development project at Mundra in Gujarat. Several stringent conditions the ministry had earlier issued notice for to Adani have been withdrawn as well.
These decisions were made in September 2015. The environmental clearance was extended in October 2015.

The Adani waterfront development project includes four ports with berths for dry and liquid cargo, container terminals, yards, a rail siding and 700 hectares for additional construction. It is part of the larger port, SEZ and township complex at the site. Neither Adani nor the environment ministry replied to questions sent byBusiness Standard on the matter.

In a case against the project before the Gujarat high court, the Union environment ministry in 2012 constituted the Sunita Narain Committee to investigate allegations of destruction of the environment at the Mundra project site.

The committee found multiple violation of regulations, large-scale destruction of the local ecology, including damage to creeks and mangroves, and illegal reclamation of land. It recommended a ban on the project’s north port where wide-scale damage had been caused and sought Rs 200 crore (Rs 2 billion), or 1 per cent of the project cost, whichever was higher, as reparation. This was beyond the maximum Rs 1 lakh fine the Environment Protection Act allows.

The ministry accepted the committee’s recommendations in 2013. It issued a show-cause notice to Adani Ports & SEZ and Gujarat officials why action should not be taken against the project developer for the violations. Adani Ports & SEZ denied all claims of wrongdoing and the state administration largely supported the company. After reviewing the replies, the ministry officials concluded the original decision for action against the company, including imposition of the penalty, was valid.

But a final decision was delayed as Jayanthi Natarajan was replaced as environment minister by Veerappa Moily and eventually by Prakash Javadekar of the National Democratic Alliance. Ministry records between 2012 and 2016 accessed through the Right to Information Act by Kanchi Kohli of the Centre for Policy Research-Namati Program show some newly appointed senior officials in the ministry reversed the opinion on Adani Ports & SEZ. In the course of this reversal, Javadekar also questioned how blame for damage to the mangroves had been ascertained and if all the points raised by Adani in their representation had been addressed adequately.

Officials reconfirmed the damage to the mangroves near the project site was proven by satellite data but they now said there was no proof that project was to blame. This finding was approved by Javadekar and the Rs 200 crore penalty was dropped.