Govt Says Green Nods Are Barriers to Pumped Storage Project Industry Growth; Experts Raise Concerns

New Delhi: Is the Modi government planning to exempt pumped storage projects from green clearances to benefit the corporate sector?

On February 15, the Union Ministry of Power released a set of draft guidelines which includes exemption from environmental impact assessments and public hearings, amongst a slew of sops and waivers, for certain categories of industries in this sector.

These sops have been proposed in the backdrop of the announcement of a number of pumped storage projects (PSPs) by big corporate houses of the country in the past year. A pumped storage project is a hydroelectric system in which electricity is generated during periods of high demand by using water that has been pumped into a reservoir at a higher altitude during periods of low demand. In simpler terms, pumped storage is like a giant battery that stores power to be released whenever the need arises.

Through the notification, the power ministry has stated that environmental and forest clearances are, in fact, amongst "barriers in the development of pumped storage projects."

"Presently, the environmental clearance and forest clearance process of PSPs [pumped storage projects] is very cumbersome since these projects are treated at par with the conventional hydro projects for the purpose of grant of EC [Environmental Clearance] and FC [Forest Clearance]. The environmental impact of PSPs constructed on existing reservoirs on on-the-river sites, and off-the-river sites is generally less than conventional HEPs [hydroelectric projects]. Further, unlike the conventional hydro projects, development of PSPs do (sic.) not lead to significant displacement of the people and thus, requires minimum R&R [resettlement and rehabilitation]. Therefore, PSPs constructed on existing reservoirs on on-the-river sites and on off-the-river sites are required to be treated as a separate category for processing of clearances as an of infrastructure project," states the ministry in its notification.

The ministry has sought to distinguish between "off-river" and "on-river" PSPs for environmental clearances. By "off-river" projects, the ministry has sought to define those PSPs which are "located away from the river course and have minimum impact on the riverine ecology".

Based on this assumption, the draft guidelines state that off-river PSPs – along with those PSPs where one reservoir is built off-river and the existing on-river reservoir undergoes minor structural modification to connect it with the new reservoir – should be treated as B2 category projects in terms of the Environmental Impact Assessment (EIA) Notification, 2006.

Projects in this category do not have to go through the rigours of the environment impact assessment, including public hearings. Nonetheless, the ministry has sought to make an Environment Management Plan mandatory for all PSP categories, including those categorised as B2.

Experts and activists have questioned the logic of designing Environment Management Plans without conducting environmental impact assessment studies and public hearings.

"It is no more than a fallacy on the part of the government to assume that environmental and forest clearances are barriers to the development of the PSPs. The government plans to allow industries to develop these projects without an environmental impact assessment and public hearings. How will any project proponent develop an environmental management plan, which is proposed to be made mandatory, without conducting an EIA first?" asked activist Rebbapragada Ravi of MM&P (Mines, Minerals and People), a collective of individuals and communities affected by mining.

Further, it has also been questioned whether these exemptions will be extended to areas with a preponderance of the adivasi population and where local communities are still largely dependent on the riverine ecology for their livelihoods.

"Again, will these exemptions be extended to projects proposed in areas categorised under Schedule V of the Constitution? If so, it will violate the Constitutional rights of Scheduled Tribes communities. The Samatha judgement of the Supreme Court of India and the PESA Act prioritises the consent of local communities over the government's developmental agenda. Any violation of PESA rules will result in conflicts between communities on the one hand and government and the industry on the other," added Ravi.

As per the PESA Act, 1996 (Panchayat (Extension to Scheduled Areas) Act, 1996), local communities have the first right over natural resources in areas categorised as Schedule V owing to the preponderance of the tribal population. Consent of local communities is mandatory through an elaborate process of public consultation through the Gram Sabhas, which are village-level councils of the entire adult population in the area.

Similarly, the landmark Samatha judgement delivered by the Supreme Court in July 1997 gives local communities a priority regarding rights of ownership of natural resources. Based on the twin concepts of "sustainable development" and "protective principle", the Supreme Court decided that tribal people can exploit minerals in Scheduled V without disturbing the ecology or the forest lands individually or through cooperative societies with financial assistance from the state.

The ministry has sought to exempt PSPs from the requirement of creation of a Local Area Development Fund as part of social obligations that need to be fulfilled by industries. The draft notification simply states that since PSPs have "minimal environmental impact" and "no R&R issues", there should be no requirement for mandatorily creating Local Area Development Funds.

It is not clear in the draft whether this exemption will also be extended to projects set up in Schedule V areas. The Samatha judgement clearly states that at least 20 per cent of the profits from any project must be set aside as a permanent fund for the development needs of affected tribal communities in addition to any expenditure on reforestation and maintenance of the ecology.

Various public sector agencies, including NHPC Limited, National Thermal Power Corporation and Damodar Valley Corporation, are developing at least 55 PSPs in different parts of the country. The total capacity of the projects is nearly 75,000 Mega Watts (MW).

Big corporate houses have also announced PSPs in the recent past. In April last year, the Sajjan Jindal-led JSW Group announced a 900 MW project in West Bengal. The business conglomerate has also entered into an MoU with the Maharashtra government for setting up a 960-MW project in Raigarh.

The Hyderabad-based leading renewable energy producer, Greenko Group, has recently announced a project in Madhya Pradesh's Neemuch district with an investment of Rs 10,000 crores. The group has undertaken work in Andhra Pradesh's Kurnool district on another project, including solar and wind power apart from hydropower storage at a massive investment of nearly USD 3 billion. Last June, the Andhra Pradesh government further approved the development of many PSPs proposed by the private sector in the state.

The sops and exemptions proposed by the power ministry do not end with what it terms as "rationalisation of environmental clearances for off-river PSPs."

The draft notification contains a number of guidelines for other ministries as well as the state governments. The draft contains guidelines for state governments to consider reimbursement of GST at the state level on hydropower project components. It further says that the state government may exempt stamp duties and registration fees from land acquired by off-river PSPs. Government-owned land, the draft further notes, may be provided to developers at a "concessional rate" on an annual lease rent basis.

The draft contains guidelines for the Ministry of Coal and the Ministry of Mines to provide exhausted and discarded mines as sites for developing power storage facilities. Besides, the draft also proposes that for the speedy development of industries in this sector, sovereign green bonds issued for mobilising resources for green infrastructure "as part of the government's overall market borrowings" to be deployed in the development of PSPs.

The writer is an independent journalist.