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Posted on 26 May 2011
CURRENT AFFAIRS  
VEDANTA

With the chimney collapse began the downfall

The PM has asked for a background check on Vedanta before its Cairn acquisition is cleared. Garima Jain digs up the company’s record

A chimney collapsed in Korba where 40 people died

Photos: Abdul Aslam

Following concerns about the track record of the UK-based Vedanta Resources, the Prime Minister’s Office (PMO) in Delhi has asked for a review of the company’s past performance in India’s mining and power sectors before approving its $9.6 billion acquisition of Cairn India. It’s a move that may further delay the mega deal that was announced in August last year.

The Vedanta acquisition is one of the biggest over an Indian resource and is seen as important because Cairn India’s wells in Rajasthan provide 25 percent of the country’s oil.

The PMO received a communication from former civil servant EAS Sarma, who worked as secretary in the ministries of finance and power and was adviser on energy in the Planning Commission. He called into question Vedanta’s ability in the oil and gas sector, adding, “To allow that company to get hold of a sizeable share in the equity of the company that controls the extraction of hydrocarbons in Rajasthan and elsewhere may not be desirable.”

A growing list of investors from the UK, Canada, US, Sweden and Holland have become wary of investing in the Vedanta Group, which has a growing public image of operating with scant regard for environmental standards and human rights.

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The Directorate General of Hydrocarbon (DGH) in Delhi has already stated that Vedanta’s abilities are not a concern as long as the existing management of Cairn India is not disturbed after the acquisition by Vedanta. With a proposed 40 percent share in Cairn India, Vedanta would not have an operating role in the project.

One of the concerns mentioned in Sarma’s email to the PMO was the collapse of BALCO power plant’s chimney at Korba (Chhattisgarh) in September 2009 that killed more than 40 people. balco is 51 percent owned and 100 percent managed by Vedanta.

A report, commissioned by the Korba police, carried out by the Raipur-based National Institute of Technology (NIT), challenges BALCO’s assertion that the collapse was caused by lightning and that the company therefore cannot be held culpable.

The NIT spent two days on site sifting through the wreckage as well as analysing the materials gathered. Their report states categorically that lightning cannot be a cause as there were no signs of melted steel, nor were there burns on the recovered bodies.

The NIT concluded that “careless, poor construction practice and poor workmanship in the construction of piles” and “improper cement content in the concrete mix” were likely factors. It says that new layers of the chimney were being built before lower levels had been given time to cure properly.

Deputy Director of Prosecutions in Korba JN Chandra is annoyed at the hoops he has had to jump through to seek any kind of justice. He told Tehelka, “The companies responsible for construction have been very negligent.” Three BALCO employees, including the project leader for the chimney, Viral Mehta, and one Gannon Dunkerley and Company Limited (GDCL) employee were charged with culpable homicide not amounting to murder. All four are now out on bail after the Supreme Court overturned the Korba district court’s decision to deny bail.

A senior ex-employee of BALCO, who left in 2003 and who did not wish to be named, told Tehelka that when Sterlite Industries (Vedanta) took control of the previously nationalised company in March 2001, company practices changed drastically and the management was told that they should not worry about obtaining approvals from the authorities on pollution, environment and forestry issues.

A nonchalant sense of entitlement is apparent in the company’s response to a Town and Country Planning notice to BALCO in December 2003 ordering a cessation of expansion work. BALCO replied by saying, “We wish to state that only basic preparatory work like sample excavation and site grading are being taken up to ensure timely completion of this prestigious project for the state and people of Chhattisgarh”.

The mayor of Korba at the time of the accident was Lakhaniel Dewanen. He says the chimney was built illegally on a 92.84 acre plot that was still classified as forest land owned by the state. The Korba Municipal Corporation (KMC) served a number of ‘stop notices’ throughout 2009, which threatened legal proceedings and the dismantling of any construction work. All were ignored by the company.

Dewanen said, “Just a week (before the accident) a team from the KMC had reached the site and stopped the construction work. However, the company defied the KMC order and resumed work on the ill-fated chimney.”

BALCO also received notices from the Central Pollution Control Board, Town and Country Planning department, ordering work on the chimney to be stopped.

The families of most of the 40 workers reported dead on that rainy day in Korba have received Rs 5 lakh each in compensation from BALCO.

Nobody from BALCO, GDCL or the Chinese company SEPCO has ever contacted the families to offer condolences or explanations. The workers themselves were left to accompany the bodies of their colleagues to their families.

Last year, Vedanta CEO Anil Agarwal was also summoned to give evidence at the Korba district court about the chimney accident, and to answer a charge of criminal trespass. His lawyers, however, got a stay from the Chhattisgarh High Court, allowing him to remain in London.

A thick pile of notices from various government departments have been sent to the BALCO offices over the past four years, all ordering work to stop, all sounding a little more desperate and impotent than the last. Just five months after all those workers lost their lives, a notice from the KMC dated 5 February 2010 said, “You have started construction without submitting the necessary papers. You have not obtained permission for construction, and we have told you repeatedly to please submit your papers or we shall have to file a case against you”. This is for a new chimney which now stands on the same spot as the one that collapsed.

In reply to TEHELKA’S queries, Vedanta Group replied, “As for Cairn India acquisition, we are committed to retain the existing management and would work towards making India as much self-reliant in oil & gas sector, with utmost association and cooperation from our esteemed shareholders.

“Referring to what has been cited in media reports on the issue of this letter, about BALCO chimney incident and Niyamgiri mining at Lanjigarh, we would like to clarify that BALCO chimney that collapsed in September 2009 was under construction under EPC contract given to SEPCO, China, who had sublet it to GDCL, India. Both are highly reputed companies and have strong track record of construction of power plants. It is also pertinent to mention that Korba faced heavy thunderstorm and lightening on the day, which is also being seen as one of the reasons for chimney collapse. The matter is sub judice in High Court. Vedanta regrets the incident and has taken all the precautions to avoid any such incident in future.”

Regarding the Lanjigarh project and the alumina refinery, the company reiterated that there has been ‘no violation of law’ and that the cases are sub judice.

FOUL PLAY
Vedanta's past is littered with environment troubles
Niyamgiri, Odisha
In August 2010, the Union environment ministry ruled that Vedanta-Sterlite had contravened the Forest Conservation Act of 1980 by illegally clearing forest to establish its alumina refinery in 2006 and again in 2009 by expanding the plant. Minister Jairam Ramesh criticised the Supreme Court for allowing the Lanjigarh project. The National Human Rights Commission identified 3.66 acres within the refinery that legally belong to Adivasis. Following this, the administration has now imposed Section 144 on the land and has registered a case of land-grab against the company under Regulation Act-2. This is the first time that Vedanta’s illegal land-grabbing has been ‘officially proved’. On 5 April 2011, a wall of the red mud pond (storing toxic waste) collapsed, polluting the Vansadhara river. Despite warning from the Orissa State Pollution Control Board in December 2008 that the wall was not properly constructed, it collapsed again. A report by the Centre for Environment and Food Security criticised Vedanta Resources for its corporate social responsibility projects around Niyamgiri.
Advalpal, Goa
In November 2009, a Bench of the Bombay High Court at Goa ruled that Vedanta’s Sesa Goa iron ore subsidiary was illegally dumping mining waste near Advalpal village in north Goa. On 6 June 2010, the dumps collapsed due to heavy rains. Tonnes of mining waste overflowed into the nullah leading to floods. The Indian Bureau of Mines found that the mining plan had been violated.
Jharsuguda, Odisha
In July 2009, a show cause notice was issued by the Orissa State Pollution Control Board (ospcb) to Vedanta Aluminium for violating water and air pollution Acts at its smelter and another nine captive power plants in the Jharsuguda district of north Odisha. In September 2010, it was discovered that these projects were operating without clearances from the ospcb. According to an rti reply obtained from the ospcb, two 135 mw captive power units of Vedanta Aluminium’s 5 lakh tonne-a-year smelter never got any clearance from the board.
Thoothukudi, Tamil Nadu
In September 2010, the company was ordered by the Madras High Court to stop production at its Thoothukudi copper smelter for environmental reasons — a decision that has been overturned by a stay order of the Supreme Court for the time being. Villagers from Thoothukudi complain of the health impact, including cases of cancer and increase in severe respiratory ailments. In November 2008, Sterlite was also found guilty of environmental damage in the Kolli Hills.
Vedanta University, Odisha
In November 2010, the proposed 15,000 crore Vedanta University to be built by the Anil Agarwal Foundation, suffered a blow after the Orissa hc ruled the land acquisition for the project in Puri as illegal and void. The court ordered that the land be returned to the original owners.

Garima Jain is a Photo Corresopondent with Tehelka.
garima@tehelka.com

Vedanta responds to this story

Vedanta is a USD 70 billion group and amongst the top 5 global diversified metals and mining companies in the world with strong global positioning in aluminium, zinc, copper, lead, iron ore, silver and commercial energy and now entering into oil & gas sector with proposed acquisition of Cairn India. In India, the group has its business operations in Rajasthan, Chattisgarh, Tamil Nadu, Goa, Orissa and Punjab.

Since 1995 the group has acquired 8 companies / assets of the companies, which are today truly world class assets. Starting from the first privatized company BALCO, in 2001, where group has 51% partnership with the Government, it has emerged as leading aluminium producer in India. The group has invested about Rs. 5,000 crore to enhance production levels from about 100,000 tonnes to 245,000 tonnes. The mining capacities have also expanded from 750,000 tonnes to 2,000,000 tonnes. BALCO today has its own 810 mw captive power generation and is all set for further expansion in aluminium production.

We are very proud that Hindustan Zinc, where we have about 65% partnership with the Government, is today world’s largest integrated zinc producer. The group has invested about Rs. 10,000 crore since acquisition in 2002 to successfully complete 3 phases of expansions to increase the production levels to 5 fold to 1 million tonne of metals, and captive power generation to 475 mw. We would also like to mention that the group is setting up 275 mw of green energy farms in Rajasthan, Gujarat, Tamil Nadu, Maharashtra and Karnataka, of which 175 mw have already been installed. Hindustan Zinc is also emerging as the top 5 silver producer in the world by March 2012 with 500 tonnes of silver production.

Another stunning example is that of SESA Goa which the group acquired in 2006. With strong investments of over Rs. 3,000 crore, SESA Goa is today the largest producer and exporter of iron ore in India.

The key for success of these three companies, which are truly global assets now, is attributed to transparent functioning with no change in their existing management and by infusing strong capital support for exploration and business development.

Today, we are expanding in commercial energy with 2 sizable projects, one in Punjab with 2640 mw and another in Orissa with 2400 mw. 1200 mw of 2400 mw in Orissa project is already operational. The ultimate objective is to produce 10,000 mw of energy.

As for Cairn India acquisition, we are committed to retain the existing management and would work towards making India as much self-reliant in oil & gas sector, with utmost association and cooperation from our esteemed shareholders.

The group is the only Indian company listed on the London Stock Exchange, making India proud. The Group has been one of the largest taxpayers in India in private sector and is proud to be associated as leading partner with government of India in the economic and industrial development of India.

Referring to what has been cited in media reports on the issue of this letter, about BALCO chimney incident and Niyamgiri mining at Lanjigarh, we would like to clarify that BALCO chimney that collapsed in September 2009 was under-construction under EPC contract given to SEPCO, China, who had sublet it to GDCL, India. Both are highly reputed companies and have strong track record of construction of power plants. It is also pertinent to mention that Korba faced heavy thunderstorm and lightening on the day, which is also being seen as one of the reasons for chimney collapse. The matter is sub-judice in High Court. Vedanta regrets the incident and have taken all the precautions to avoid any such incident in future.

Regarding Lanjigarh project, mining at Niyamgiri is the mandate of Orissa Mining Corporation (OMC), the Government of Orissa body. Sterlite Industries, a company of Vedanta, has an agreement with OMC, where in OMC is to provide 150 million tonnes of bauxite to Sterlite. We would like to assure you that not a single blade of grass has been removed since 2004 at the Niyamgiri mining site, since the matter became sub-judice. The Hon’ble Court had cleared the project in August 2008. As for our Alumina Refinery, we would again reiterate that there has been ‘no violation of law’. Sterlite Industries has filed a case in Hon’ble High Court for granting permission for the expansion of Alumina Refinery, since MOEF had rejected the proposal for expansion of refinery.

Vedanta is a law abiding company maintaining highest standards of transparency, corporate governance and ethics. We are proud to invest close to USD 20 billion in India and also that more than USD 15.7 billion has been raised in foreign capital and brought into India for industrial development. More than 32,000 employees work in Vedanta across globe and livelihood of over 15 lakh people is attached through direct / indirect employment and ancillary industries.


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Posted on 26 May 2011
 

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