India’s Dam Building Abroad: Ignoring Lessons from Home?

Himanshu Thakkar
Friday, December 10, 2010

Indian companies and state-owned enterprises have rapidly expanded their domestic and overseas investments in recent years. Not least motivated by the example of Chinese investors, they are trying to gain access to foreign resources, win international contracts, and strengthen their relations with trading blocks such as the Association of Southeast Asian Nations (ASEAN). They have long had a presence in neighboring countries such as Nepal and Bhutan, and are now also spreading to more distant countries in Asia and Africa.

This article looks at the track record of Indian institutions that are engaged in building dams in India and abroad, and analyzes some of the problems their new projects have created.

The actors and the stage

A Day of Action protest against India’s plans to dam Burma’s rivers.
A Day of Action protest against India’s plans to dam Burma’s rivers.

A large number of Indian companies are involved in the current foray into domestic and foreign power projects. They include state-owned and private-sector power plant developers and equipment suppliers; wind power companies; transmission companies, and state-owned and private consultancies.

Indian companies are involved in power projects in Afghanistan, Bangladesh, Bhutan, Burma, Congo, Ethiopia, Ghana, Indonesia, Iraq, Malaysia, Nepal, Rwanda, Sri Lanka, Tajikistan, Uganda and Vietnam. The Indian government has also offered Nepal, Bhutan and Tajikistan outright grant assistance for the construction of some of the hydropower projects by Indian developers. The Export Import Bank of India has provided support for Indian power projects abroad through various instruments. They include direct loans and lines of credit.

On the domestic front a large number of new dam financiers have entered the foray, including some well-funded ventures with capital to burn. Just to name two of the biggest, Life Insurance Corporation of India has extended more than US$2 billion line of credit to the national dam building agency, the NHPC. And Blackstone group recently announced that it would invest up to $1 billion in India's power sector in the next five years. This is in addition to international financiers such as the World Bank, IFC, JBIC and ADB .

With finances available aplenty, new companies are making their first forays into dam development. A large number of new companies are starting with smaller dams with a capacity of less than 25 MW. It is expected that some of these companies will eventually move into construction on larger dam projects after gaining experience.

The impacts

No detailed studies on the impacts of India's foreign investments in hydropower projects exist. There is evidence that Indian dams abroad also have serious impacts on affected communities and the environment. Here are just a few examples:

  • According to students' groups from the affected region, the Tamanthi Hydropower Project in Burma will submerge about 68 square kilometers of land, and displace about 30,000 people from 35 villages. The affected communities belong to the indigenous Kuki people. Some of the affected people have already been displaced by the country's military rulers without any compensation, and the students' groups have protested against the project in India.
  • The West Seti Hydropower Project in Nepal will submerge 22 square kilometers of land, displace at least 1,500 families, and dry out a long stretch of the Seti River. The dam's power will be exported to India.
  • The 1,020 MW Tala Hydropower Project in Bhutan has almost totally dried up 30 kilometers of the Wangchu River, and damaged the rich biodiversity of a much larger region. The project is located in a geologically fragile area, and suffered extensive damages from flooding in 2000.

Domestic dam plans

India's hydropower potential is more than 150,000 MW, according to the Indian government's Central Electricity Authority. About a third of the potential has been developed so far and about 9% is being developed. It is small wonder that new players are entering the market rapidly and forcefully. Additionally, the Indian government is escalating dam plans in northeast India for "strategic reasons," including as part of a strategy to establish "first user rights" on the region's water, which are also claimed by China. The Indian Government has plans to build 135 large dams in Arunachal Pradesh state alone. (See "Anti-Dam Protests Get Louder in Northeast India." ) Adding fuel to the fire, China claims that Arunachal Pradesh is part of China. Building hundreds of large dams in the biodiversity-rich, seismically active, erosion-prone and mountainous northeast at a time when climate change is impacting river flows is a recipe for disaster.

India's National Water Mission (part of its National Action Plan on Climate Change) has as one of its goals the "promotion of basin level integrated water resources management," which appears to translate into exhausting the nation's potential to build dams. Credible and comprehensive basin-wide carrying capacity studies or cumulative impact studies have not been undertaken in any basin. That said, the Federal Ministry of Environment and Forests continues to grant sanctions for hydroelectric projects even for rivers where river basin studies are just beginning, and mostly to agencies with questionable track records and where issues of conflict of interest linger.

Discussions on the new National Water Policy, to be finalized by March 2013, have already begun, but the water sector establishment has shown no interest in consulting the people and organizations working at the grassroots or those who have been critical of the government's water sector agenda.

Exporting conflict?

Dams in India have a long and extremely divisive history. Poor, marginalized and often tribal people bore the brunt of dams' impacts in India, but received few if any of their benefits. Dams have triggered many large-scale social mobilizations and huge demonstrations, the blockade of construction sites, hunger strikes, court cases and other forms of conflict. Indian dam builders and financiers have not developed credible policies to address the negative social and environmental impacts of their projects. In numerous cases, they have circumvented laws, government and court decisions. Already, dams with Indian involvement have also triggered protests and court cases in Nepal, Burma and Uganda.

In many host countries where Indian projects are being built, there are no appropriate laws or policies to regulate the social and environmental impacts of dam projects. In countries such as Bhutan, Burma, Ethiopia and Vietnam, there is no political space for an independent civil society, judiciary or media. In such countries, foreign investors and financiers have a particular responsibility to address the social and environmental impacts of their projects.

As they expand their foreign operations, Indian dam builders and financiers risk exporting their negative domestic track record and creating conflicts over their projects abroad. The Export Import Bank of India and Indian companies now building dams abroad are well advised to adopt the recommendations of the World Commission on Dams for good practice in water and energy sector development, to avoid getting embroiled in international conflicts over their projects, and to avoid bringing disrepute to their name and that of the country of their origin.

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