Nitin Sethi scoops the latest instance of cronyism: The environment ministry has withdrawn a Rs 200 crore fine from Adani Ports for damaging the environment imposed by the UPA government, the biggest penalty for green violations on record, and also extended a 2009 environmental clearance for the company’s waterfront development project at Mundra in Gujarat.
The Union environment ministry has withdrawn its demand for a Rs 200 crore restoration fund from Adani Ports & SEZ for damage to the environment imposed during the United Progressive Alliance (UPA)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 Several stringent conditions the ministry had earlier issued notice for to Adani have been withdrawn as well.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 by Business Standardon 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.
Nitin Sethi in New Delhi
Nitin Sethi, Business Standard
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.
The Rs 200 crore fine was imposed after a court-appointed committee had in 2013 recommended the figure in view of the violations, and pointed out the fact that it amounted to just 1% of the entire project cost. Barely a month ago, Environment Minister Prakash Javadekar told whoever would listen that the government is bringing in a strict regime against environmental violators. The hallmark of this new regime, ironically, was that penalties were increased – extending up to Rs 10 crore and including jail terms. Calling the earlier laws weak, Javadekar had touted the new penalties to be bold changes, and his ministry had drafted a law.
The Adani Group has a debt of Rs. 72,000 crore – equal in amount to the total debt of Indian farmers, Janata Dal-United (JD-U) leader Pavan Kumar Verma said today, as he raised the issue of corporate loans in the Rajya Sabha. Drawing from the debate over business tycoon Vijay Mallya, who has refused to return from the UK to face banks over unpaid loans, Mr Varma said that state-run banks are owed Rs. 5 lakh crore by corporate houses. “Of this, roughly Rs. 1.4 lakh crore is owed by just five companies which include LANCO, GVK, Suzlon Energy, Hindustan Construction Company and a certain Adani Group and Adani Power,” Mr Verma said. “The amount owed by this group (Adani), both in terms of its long-term and short-term debts, today is around Rs. 72,000 crore. Yesterday, it was mentioned that the entire amount that the farmers need to pay in terms of loan is Rs. 72,000 crore,” Mr Varma said. Mr Varma claimed that though the company’s net worth has gone up by 85 per cent in the last two to three years, economic experts have said the company’s ability to pay the interest on its debts has come down dramatically.