Union minister for environment Jairam Ramesh comes down hard on projects that violate environment norms

Stocks of several companies may get trampled under the charge of the environment ministry with maverick minister Jairam Ramesh at the helm as he comes down hard on projects that are in violation of norms. It does not look like he is any mood to let up the pressure despite growing protests from powerful industrialists whose projects are stuck, and increasing animosity with other ministries.

Hindustan Construction Company (HCC) is the latest to be hit - the stock has come off sharply from around Rs75 to Rs65 as its ambitious Lavasa project came under the scanner due to complaints from locals. On enquiries from Mr Ramesh's ministry about violations of environment norms, the Maharashtra government has apparently said that only the first phase has been cleared. This could mean problems for Lavasa's subsequent phases.

In mid-July, NCC Power Projects, a subsidiary of Nagarjuna Constructions got a rejection from the National Environmental Appellate Authority for its thermal power project at Sompeta, 120 km from Visakhapatnam. The 2,640MW project is worth Rs120 billion. The company was going to go in for an appeal.

Mid July, the ministry also denied approval for NTPC's 261MW Rupsiabagar-Khasiyabara hydro-electric project in Pithoragarh district because it was being set up in a highly ecologically sensitive wildlife habitat on the river Goriganga in Uttarakhand. NTPC has come off from Rs205 since then, to the current price of Rs193, though not because of this, but chiefly on disappointing results. Nagarjuna's price has been affected because of this news to some extent - the stock is down from Rs185 mid-July to Rs165 now.

Vedanta Resources is also in the news of late as the NC Saxena panel report sought a ban on mining projects of the company in Niyamgiri Hills in Orissa citing violations. The committee has already accused Vedanta of illegally occupying forest land. (Read more  Activist calls for legal action against Vedanta, miners http://www.moneylife.in/article/8/4370.html) This will have implications for group company Sesa Goa. It has called its expansion of capacity from 1 million tonnes to 6 million tonnes, unauthorised.

The Naveen Patnaik government in Orissa has come out strongly against the committee's findings saying that the Supreme Court has already given its ruling on the matter. However, attorney general GE Vahanvati said that the apex court nod to Vedanta Resources' bauxite mining project in Orissa does not bind the environment ministry to give an automatic clearance to it, and that the project must be approved only on merits. Therefore, the environment ministry will probably take the ultimate call but further legal battles cannot be ruled out. In any case, the company is in for a long-drawn-out siege.

Work on the Rs300 billion Ganga Expressway Project was halted on 29 May 2009, when the Allahabad High Court ordered the UP government to get the project cleared by the environment ministry. The project, won by Jaypee Infratech, had also been facing land acquisition hurdles. Late June this year, another UP project, the Upper Ganga Canal Expressway was halted pending clearance by the Union ministry of environment and forests. Six companies had cleared the preliminary rounds for this project - among them were Era-Sibmost, IRB Infrastructure, Jaiprakash Associates, and Reliance Infrastructure. At Rs82, Jaypee Infratech is significantly below its listing price of Rs102 while Jaiprakash Associates has been oscillating between Rs120 and Rs130 for many months now.

Between 2003 and 2007, Prakash Industries, Hindustan Zinc, UltraTech and Chhattisgarh Captive Coal Mining were given captive blocks in the Hasdeo-Arand coal field (in Chhattisgarh). The block is said to have over 5 billion tonnes of coal reserves. Now the environment ministry has given the red signal for mining activities in this field citing large number of species, trees and unfragmented landscape and wildlife habitat in the region. The companies, which were already given licenses, will be allocated alternate coal blocks. However, delays are inevitable.

A recent joint survey on nine coal fields conducted by the coal ministry and the environment ministry recently concluded that almost 35% of the area under study was not viable for mining activities - the survey was conducted on fields in North Karanpura and West Bokaro (Jharkhand), IB Valley (Orissa and Chhattisgarh) Singaurali (Madhya Pradesh and Uttar Pradesh), Talcher (Orissa), Wardha (Maharashtra), Mandirgarh and Hasdeo-Arand (Chhattisgarh) and Shoagpur (Chhattisgarh and MP).

However, in a clear sign of huge inter ministerial tussles, of the 203 blocks that were declared non-viable in these nine fields, the boundaries of mines in eight coalfields were tweaked to get 77 blocks out of the barred list and apparently prompted by the Prime Minister's Office (PMO), a high-level inter-ministerial panel recommended that mining be allowed in these 77 coal blocks. It is an open secret that Mr Ramesh has made bitter enemies in the coal, civil aviation and transport ministries.

In June, bid submissions for the 4,000-MW ultra mega power project (UMPP) at Sarguja in Chhattisgarh were extended by two months because it had not received clearance from the ministry of environment and forests. The PMO was expected to intervene but has not yet done so. In April this year, Mr Ramesh said his ministry would not approve Adani Power group's proposal for drawing water from Pench Tiger reserve for its project in Madhya Pradesh.

South Korean steel major Posco's Rs540 billion proposed project in Orissa is stuck for four years now because of environmental clearance. Posco needs about 4,004 acres of land to build a 12 million tonnes per annum (tpa) steel plant in Jagatsinghpur district of Orissa - however almost 75% of this land falls under the forest cover.

JSW Energy has been warned by the environment ministry that it will have to shut down its proposed plant in Ratnagiri in Maharashtra if its operations impact fruit production (Alphonso mango) adversely. JSW is going to start a 1,200MW coal-based plant in Ratnagiri. The locals have expressed concerns that the plant will emit toxic gases, which could harm fruit production.

The City and Industrial Development Corporation (CIDCO) is making fresh pleas for an environment clearance and an approval of the coastal regulatory zone (CRZ) for the proposed airport at Navi Mumbai. However, the environment ministry looks unrelenting on this one citing diversion of two rivers, destruction of mangroves, and flattening of a hillock. There are strong rumours that the airport site may be shifted to Nevali near Kalyan and that a prominent unlisted builder, anticipating this development, has been quietly acquiring land in this area. Land prices have already shot up from Rs500,000 per acre to Rs10 million per acre within a space of a few months.

Nuclear Power Corporation of India's (NPCIL) four projects in Haryana, Madhya Pradesh, Gujarat and Andhra Pradesh have come into environment clearance problems. The Rs9 billion upgradation of the Gopalpur port from a seasonal one to an all-weather deep-water one is stuck because of environment clearance as the upgradation could affect the nesting of Olive Ridley turtles, a rare species. It is being promoted by Gopalpur Port Ltd - a joint venture between Orissa Stevedores and Sara International, which has achieved financial closure for the first phase work.

The pressure is on from international quarters as well. Mid July US environmentalist groups charged the US Export Import (Exim) Bank of succumbing to intense lobbying since it approved $600 million in loan guarantees to suppliers for Reliance Power's (R-Power) 3,960MW coal-fired project in Sasan, Madhya Pradesh. Incidentally, the Exim Bank decided not to finance the power plant citing emissions and detrimental effects on the environment.

India has 38 tiger reserves covering 40,969 sq km, 88 elephant corridors, which allow them to move from one habitat patch to another, 100 notified national parks, 355 wildlife sanctuaries, four coral reefs and 34 mangrove areas identified for protection. The environment ministry has undergone a huge change under the helm of Mr Ramesh, whose mandate was to make it more accountable and transparent.

From being accused of clearing projects without necessary investigations, the ministry is now nicknamed the 'no clearance ministry' mostly in the industrial and political circles. It is tough to assess whether prime minister Manmohan Singh will stand behind Jairam Ramesh's firm views on environment issues (since pressure from the industry is building steadily). However, for now, a lot of the smugness about easy environmental clearances is being wiped out from the face of corporate India.