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Business Commentary/Dilip Thakore

Dirty tricks, power jinx, Cogentrix

The Supreme Court's clean chit to Cogentrix should have a lot of people in the nation's judiciary, bureaucracy and ecology preservation movement squirming with embarrassment.

The apex court overruled the judgement (delivered in February 1998) of the Karnataka high court. The latter had directed the state government to order a Central Bureau of Investigation enquiry against Cogentrix. There were allegations that Cogentrix officials paid bribes and kickbacks to politicians to get the Mangalore power project off the ground.

The buck never seems to stop anywhere. There is little introspection, let alone any signs of remorse, that a 1000 mega-watt power plant, which should have been up and running in a state plagued by constant power outages, has been delayed by over five years and that it may not take off at all.

The apex court dismissed the high court order saying the latter had ordered the CBI probe on “flimsy grounds and materials” and that it adjudicated the case with “a jaundiced eye”.

“The attempt made by the high court in this case appears to us to be a blind shot fired in the dark without even knowing there is a prey at all,” the two-judge bench of the Supreme Court remarked. They cleared the promoters of MPC (promoted by the US-based Cogentrix Inc and the Hong Kong-based China Light and Power Company) of charges of wrong-doing.

Unfortunately for the people of electricity-starved Karnataka, the Supreme Court judgement came a little too late. On December 9, three days before the Supreme Court judgement, exasperated by procedural and judicial delays, Cogentrix and CLPC took a 'business decision' to abandon the project.

The history of the power project indicates that the inordinate delay in dispensing justice also contributed to the time-overrun.

The memorandum of understanding between Cogentrix and the Karnataka government for the power plant was signed way back in 1992. The Union government brokered the deal. In fact, the Union government was so enthused about the deal that it accorded the project ‘fast-track’ status in 1993.

But it is a reflection of doing business neta-babu style that in spite of the fast-track status, it took almost four years for the power project to obtain all the requisite clearances. These include the Foreign Investment Promotion Board nod, the Power Purchase Agreement, land allotment, water availability confirmation, Pollution Board clearance, the Central Electricity Authority clearance, selection of EPC contractor, section 29(2) notification, chimney height clearance, revised PPA, environmental clearance, techno-economic clearance, formation of village development advisory committee from the departments of the national and state governments which had officially blessed the project.

This is because central and state governments in India are strangers to the concept of single-window clearance (the norm in China and most south-east Asian nations). The SW system places the onus of getting government department clearances on the government. Instead, the onus of obtaining all departmental and other clearances is on the project promoter. Usually clearances are granted sequentially rather than concurrently.

Absurd procedural delays are built into the system presumably to enable politicians and bureaucrats to shake down foreign and domestic investors along the clearances chain.

What surprises one is that public interest litigation against environmental clearance that was already granted, has been entertained at all. This, when two PILs relating to location and land acquisition for this project had been dismissed! The 'green PIL' should have been summarily dismissed instead of referring it to the Karnataka high court for review, causing further delay.

Even while one bench of the Karnataka high court was hearing the referred environmental clearance case, another bench of the same court admitted another PIL against the project. The second PIL alleged that Rs 600 million had been paid in bribes by the promoters to unspecified politicians and bureaucrats for a favourable power purchase agreement. After hearing arguments of the petitioners and MPC, the high court ordered a CBI enquiry into the petitioners’ allegations one year later (February 1998).

This was the order struck down by the Supreme Court in harsh language recently after the court heard arguments for eight months.

This confusing sequence of events highlights the need for radical improvement in project clearance systems (especially for foreign investment) and circumspection while entertaining PIL writs relating to projects of public importance.

One point to note is that after the collapse of the Soviet Union and its bankrupt Marxist ideology, India’s influential Left intellectual community has heavily infiltrated the ecology and environment preservation movement. The objective is to stymie economic development in the hope of igniting the people’s revolution.

Instead of promising to clear the project forthwith, national and state politicos and bureaucrats are now attempting to reopen PPA negotiations with MPC. Some people, particularly those who govern us, never learn.

ALSO SEE

Sucheta Dalal on the Cogentrix controversy

Dilip Thakore

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