Asia Times: Indian Supreme Court clears Cogentrix of corruption



	December 15, 1999	atimes.com

India/Pakistan

Indian Supreme Court clears Cogentrix of corruption
By Ranjit Dev Raj

NEW DELHI - Days after global power giant Cogentrix announced withdrawal from India for public interest litigations, the Supreme Court cleared its $1.3 billion fast-track power project in southern Karnataka state of corruption charges.

The Supreme Court has set aside a judgement by the Karnataka High Court in February 1998 directing the Central Bureau of Investigation to investigate charges of corruption leveled against Cogentrix in a public interest litigation.

Reacting to the order, chief executive officer of Cogentrix, Ron Sommers said he would refer to his principals in the United States for possible reversal of the giant's decision, announced last Thursday, to quit India. The company withdrew from the Karnataka power project, citing delays in gaining government approvals and in resolving the litigation.

The public interest litigation, filed by consumer activist Arun Kumar Agarwal, alleged offshore payments by Cogentrix's partners in the Mangalore Power Company, the Hong Kong-based China Light and Power through a subsidiary in the British Virgin Islands. It was the latest in a series of charges brought against the company by environmental and citizen groups protesting its involvement in the power project.

Monday's court order paves the way for counter-guarantees promised for the project by the previous Bharatiya Janata Party-led government of Prime Minister Atal Bihari Vajpayee. The promise was made last year, when the government was anxious to retain foreign direct investment in the face of sanctions imposed by the US for carrying out a series of nuclear tests. After Vajpayee came back to power following elections in October, his government promised to speed up liberalization and clear all pending fast-track power projects.

According to the original deal signed with the Karnataka government in 1992, the Mangalore Power Company was to build and operate a 1,000 megawatt coal-burning power plant. But the project quickly ran afoul of environmental groups and local people who objected to its location on an environmentally fragile estuary of the Mulki river which supports agricultural and fishing communities.

The Environment Support Group and the Janajagriti Samiti (People's Watch Forum) have challenged clearances obtained by the Mangalore Power Company from the Union Ministry of Environment and Forests in state courts. Support for the Karnataka NGOs has come from communities in Jenks, Oklahoma which have opposed plans by Cogentrix to build a power plant along the Arkansas river.

Leo Saldanha, campaigner for the Environment Support Group said his organization would continue to expose ''socially unjust, environmentally destructive and economically unviable projects''. He said over 3,000 acres of an extremely fertile and verdant region of the ecologically unique Mulki estuary were threatened by three mega thermal power plants.

Encouraged by the success of Cogentrix in obtaining quick environmental clearances, the Indian-owned Nagarjuna Power Company has proposed another 1,000 megawatt project in the area. A third proposal for a 150 megawatt, barge-mounted power plant at the mouth of one of the Mulki estuaries has been made by Euro Kapital of Germany.

According to Saldanha these projects threaten the region's unique culture and ethos as well as archaeological monuments, including two monasteries established over six hundred years ago.

In India the generation and distribution of electricity is controlled by state electricity boards which have over the decades earned a reputation for inefficiency, corruption and dispensing political patronage. ''Illegal connections and large-scale power thefts, long the bane of the power sector, cannot happen without patronage,'' says R K Pachauri, chief of the respected Tata Energy research Institute.

On the other hand, the entry of multi-nationals into the power sector as part of India's eight-year-old liberalization program has also been dogged by charges of pay-offs and indifference to the interests of consumers and local populations near project sites.

The judgement increases the likelihood of the project's revival, if Cogentrix can be assured of government support.

(Inter Press Service)