Coca-Cola freezes expansion at Varanasi due to protests, approval delay

The company, in its letter to UP chief secretary, has said it will explore options to relocate the line within the state after taking all regulatory approvals

Beverages major Coca-Cola has decided not to proceed with the proposal to expand its Mehdiganj unit near Varanasi, stuck for want of regulatory clearances and other legal trouble, spurred by public protest at alleged over-exploitation of ground water.

Hindustan Coca-Cola Beverages Pvt Ltd, bottling arm of Coca-Cola, has written to Alok Ranjan, chief secretary, Government of Uttar Pradesh, stating: “Due to inordinate delay in receiving of the no-objection certificate, causing delay in expansion of capacity, leading to financial losses, we have decided not to pursue the expansion at Varanasi.”

Villagers and activists had long been alleging over-exploitation and pollution of groundwater and soil by the unit. In February last year, villagers from around Mehdiganj, about 25 km from Varanasi, had asked the government to reject Coca-Cola’s application for the $25-million expansion, saying it would further worsen the area’s water condition. The plant became operational in 1999.

“We are delighted that the (Union) government is doing what it is supposed to do — protect the common property resource of groundwater from rampant exploitation, particularly in water-stressed areas. This should serve as a notice to other companies that they cannot run roughshod over Indian rules and regulations and deny community rights over groundwater,” said Amit Srivastava of India Resource Centre, which has been leading the campaign against the unit.

Hindustan Coca-Cola Beverages, in its letter to Ranjan, has said it will explore options to relocate the line within Uttar Pradesh after taking all regulatory approvals. “We will continue to operate our returnable glass bottle line at the plant,” it added.

In June this year, the National Green Tribunal had given permission to Coca-Cola to resume operations at Mehdiganj, staying an order of the Uttar Pradesh Pollution Control Board that had directed the company to close the factory for various violations, including groundwater extraction.

NGT had, however, said the stay would be effective only if the company kept production at up to 600 bottles per minute. The company will not be able to increase production capacity till it gets a clearance from the Central Ground Water Authority (CGWA). Otherwise, the stay will not be effective.

The Mehandiganj plant is a single-line facility and the only glass bottles unit of Hindustan Coca-Cola Beverages Pvt Ltd, the bottling arm of Coca-Cola. According to media reports, groundwater levels in Mehdiganj have dropped 7.9 meters (26 feet) in the 11 years since Coca-Cola started bottling operations there.

Coca-Cola has faced similar issues in the past as well. In March 2004, Coca-Cola had shut down a $16 million bottling plant in Kerala that reportedly had caused drastic decline in availability and quality of water. In April 2005, Kerala High Court had rejected water use claims, pointing out that wells in Kerala continued to dry up in summer, months after the local Coke bottling unit stopped operations.