Vedanta faces ₹233 crore notice over 'illegal' river water extraction

Odisha alleges unauthorised extraction from Bheden river for nearly a year; Vedanta denies wrongdoing, says assessment is flawed and operations comply with norms

The Odisha government has served a notice on Vedanta Aluminium Limited, Jharsuguda, asking the company to pay ₹ 233.11 crore for unauthorised water extraction from the Bheden river system between May 2025 and April 2026.

 

The demand included base water charges, 2 per cent interest, and a six-time penalty for lifting over 30 lakh cubic metres of water every month without authorisation. The company has, however, denied the charges and said the penalty is based on incorrect assumptions that do not reflect the factual or regulatory position.

 

According to the notice (reviewed by Business Standard), the penalty has been imposed on Vedanta Aluminium Ltd at Bhurkhamunda in Odisha's Jharsuguda district following complaints from villagers and findings of a field verification by officials of the Water Resources Department. The company allegedly drew water without authorisation for nearly a year.

 

 

In the notice issued by Jishu Krushna Beriha, superintending engineer, Burla Irrigation Division, the deputy chief operating officer of Vedanta Aluminium has been asked to deposit ₹233.11 crore within one month for “illegally lifting water” from Kheruwal Nallah, a distributary linked to the Bheden river, without permission from the Department of Water Resources.

 

The notice, issued on April 29, stated that such unauthorised extraction of water is a serious violation of the Orissa Irrigation Act and Rules, 1959 and 1961, as amended, and adversely affects the rights and resources of the local community. It warned that failure to comply with the notice would invite action under the Orissa Irrigation Act and Rules. The company has been directed to immediately stop all illegal water-lifting activities from the river.

 

The department, in the official communication, said complaints had first surfaced in May 2025 when the district administration in Jharsuguda received allegations of unauthorised extraction. The issue resurfaced after villagers again approached the Collector’s office on February 9 this year, prompting a discussion during the district-level revenue review meeting on April 7, where it was decided to carry out a field inspection. The subsequent site verification by irrigation authorities allegedly established that the company continued to draw water from the river channel without valid authorisation.

 

The departmental calculation sheets attached to the notice show that the charges were worked out month-wise using surface water rates, penal dues, interest, and accumulated outstanding amounts, eventually pushing the total liability to ₹233.11 crore. The company was found to have been lifting water — from 32,14,080 cubic metres in May 2025 to 30,06,720 cubic metres in April this year.

 

Officials said the penalty was imposed after the company was found to be extracting water without a sanctioned agreement from the Department of Water Resources, and the demand has been raised after proper assessment and calculations as per procedures following the field inspection.

 

Vedanta Aluminium, however, has strongly contested the demand and denied any wrongdoing. In its response, the company said the penalty notice was based on “incorrect assumptions” and did not reflect the factual or regulatory position. The company maintained that it has been operating in compliance with applicable norms and that the computation adopted by the irrigation authorities was flawed.

 

"The company operates under valid and existing water drawal agreements with the Department of Water Resources, Government of Odisha, authorising a total drawal of 112.9 cusecs of water, against which applicable charges are being regularly and duly paid. The actual drawal from the Hirakud reservoir is approximately 80 cusecs, which is well within the approved limits," Vedanta said in a holding statement, adding that the company remains committed to full regulatory compliance and transparent engagement with statutory authorities.