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Govt cancels Rs 200-crore green fine on Adani

Adani Ports & SEZ was ordered to pay for damage to environment during the UPA govt

Adani asked to pay Rs 25 cr for restoring environment

The Union environment ministry has withdrawn its demand for a Rs 200 crore restoration fund from Adani Ports & SEZ for damage to the environment imposed during the United Progressive Alliance (UPA)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 Several stringent conditions the ministry had earlier issued notice for to Adani have been withdrawn as well.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 Standard on 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, or 1 per cent of the project cost, whichever was higher, as reparation. This was beyond the maximum Rs 1 lakh rupee 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 refuted 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.

In its reply to the show-cause notice, on the imposition of the penalty, Adani Ports & SEZ argued “any substantially reduced amount voluntarily keeping in mind our CSR contributions as well as challenges faced by the infrastructure sector in the current economic scenario” be imposed.

The Narain committee had recommended cancellation of clearance to the north port. Instead, while extending clearance to the rest of the project, the ministry decided Adani Ports & SEZ could reapply at a later stage for clearance to the north port.

The ministry had also earlier concluded environmental clearance for phase II of the thermal power plant in the project be cancelled for violating norms. This decision was reversed.

While the idea of the penalty had been dropped before, other changes in the ministry’s views came with joint secretary Bishwanath Sinha assuming charge of the section dealing with the Adani Ports & SEZ file. Sinha in a note on March 2015 wrote, “It is prudent that the environmental clearance granted should not be cancelled for any infrastructure activity, including that of the north port.” He recommended further studies to assess the damage and how it could be fixed.

The then environment secretary Ashok Lavasa said the minister should decide if he would like to hear the project developer personally before deciding on the matter.

Javadekar’s personal secretary wrote the minister wanted to know “if all the points raised in the proponents’ representations have been addressed adequately”. He also asked “on what basis the comparative geo-mapping of 2005-2011 has been carried out”.

The geo-mapping had been undertaken to study damage to mangroves. Sinha replied, “It is not possible to clearly establish whether such changes took place before 2007, when the land came in possession of the project proponent, or the period after. The decision of the committee to capture the satellite data from 2005 is also not explained in the report of the committee. Hence, it is not possible to clearly substantiate the observation and responsibility of project proponent.”

Sinha suggested that the north port, the site at which the damage had taken place, be separated to be dealt with later and not rejected. He added further studies were required to assess the damage and that the biodiverse areas already being used for development be left out of any conservation area demarcated in future.

Susheel Kumar, special secretary at the time, said as studies for damage were to be conducted in future, the costs could not be estimated at the moment. Future studies could decide if the clearance granted to the thermal power plant should continue. Lavasa said the study should not decide the fate of the thermal power plant’s phase-II but only be considered for its subsequent expansions.

In September 2015, the ministry did away with the demand for Rs 200 crore. It deferred a decision on the north port. It decided that if any violations of regulations had been committed they would be examined later independently. Another strategic impact assessment study done later would help “suggest future corrective actions as well as the guiding tool on extension and addition of the capacities.”

Subsequently, the thermal power plant’s phase II also secured clearance.

The ministry has now proposed retrospective clearance and condoning green violations, which could come to the Adani project’s rescue in case violations are determined in future independent investigations proposed by the ministry.