The Hindu : Chhattisgarh to cancel water supply contract

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Saturday, Apr 12, 2003

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Chhattisgarh to cancel water supply contract

By Aarti Dhar

RAIPUR APRIL 11. The Chhattisgarh Government has decided to cancel the contract with a private firm for distribution of waters of the Sheonath river in Durg district. This follows protests by NGOs and the Left parties raising the basic issue of rights of the people on natural resources. There were allegations that the local people were not allowed to fish or carry out any other activity within the area where the firm (Radius Water Company) had constructed an "anicut" (barrage) across the river for storing the water that is subsequently distributed to units at the Borai Industrial Growth Centre during the dry season. Even drilling bore wells in villages around the area was not allowed.

The agreement signed with the company will be terminated within the legal framework and compensation paid for the remaining part of the 22-year contract after the Law Department and the Advocate-General give their opinion. The agreement was signed by the erstwhile Madhya Pradesh Government. The Supreme Court directive in the Balco case allows the State Government to review the agreements made by the Madhya Pradesh Government.

According to the Chhattisgarh Chief Minister, Ajit Jogi, even if the Government was bound to abide by the agreements made by the Madhya Pradesh Government, any contract that was not in the interests of the people would be reviewed, particularly in this case because it was against the law of nature and constitutionally illegal since water is categorised under the common property resources. The Government will pay any price to end the contract but will at no cost allow privatisation of natural resources, he told a high-powered meeting held on the issue. He pointed out that though his Government had not signed the contract for distribution of water with private participation, the message going out was that Chhattisgarh was promoting privatisation of natural resources.

The Borai Industrial Growth Centre, situated on the banks of Sheonath, came up in 1989 and the water for it was to be drawn from the same river. However, since Sheonath is not a perennial river, the Madhya Pradesh Government had committed to release water to the industrial units which it did from the Kharkhara reservoir between September and July. But to store the water for further use, it was necessary to build a barrage at a cost of Rs 1.10 crores. Since the Government was not in a position to release funds, the project was put off. It was revived again in 1992 by the M.P. Audyogik Kendra Vikas Nigam (now known as the Chhattisgarh State Industrial Development Corporation Limited), designated as the nodal agency. The estimates this time were Rs 4.5 crores and the project dropped again.

The demand for water increased to 3.75 MLD (million litres a day), including 3.6 MLD from a single consumer, for which an agreement was also executed between the consumer and the nodal agency in 1996. A feasibility study was done once again and a technical sanction for Rs 7.5 crores was given by the M.P. Audyogik Kendra Vikas Nigam Limited. Since it did not have funds to undertake the work on its own, it asked the bulk consumer to share 50 per cent of the cost of the barrage construction and get water at a fixed rate for a long period and adjust their share against water bills. The consumer initially agreed to the proposal but backed out later.

The nodal agency was under obligation to supply the agreed quantity of water to this bulk consumer and did not have sufficient means to implement the project with its own resources, hence involved the private sector for creation of infrastructural facilities. Finally, the agreement for 22 years was signed with the company for providing water during the six months. The Radius Water Company buys water from the river at a low cost but sells it to the nodal agency at a very high cost because of lack of demand. The nodal agency has to buy water at a higher price because it is obliged to pay a certain fixed price to the company under the agreement. The Government now points out that the company has not taken the prior approval of the State Water Utilisation Committee and this amounted to violation of norms that could deprive them of the compensation.

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Chhattisgarh to cancel water supply contract