BMICP @ a Glance
An
Introduction to the Bangalore-Mysore Infrastructure Corridor Project (BMICP)
The legal, environmental, financial and social issues
surrounding the Bangalore Mysore Infrastructure Corridor Project (BMICP) are
extensive, however in the interests of brevity, this note attempts to provide a
background, and, highlight key issues that should be of concern to potential
investors and the general public.
The BMICP envisages the construction of a 4-lane (expandable
to 6) walled, toll expressway and 5 townships between Bangalore and
Mysore. A schematic view of the proposed expressway and townships, and
existing road is available at: http://www.nicelimited.com/project.htm
The BMIC Project requires its townships to cross-subsidise
the expressway, for the latter is not financially viable on its own[i]
and the townships are viewed as a captive source of expressway tolls, for they
will mainly be accessible via the expressway.
A major justification for the project is the need to de-congest
Bangalore, but without demonstrating by detailed analysis the willingness of
people to pay and live in the proposed townships, or pay for travel on the
expressway. Furthermore viable
alternatives for development of existing urban centers exist but have not been
considered. The project has been touted
as being modeled on the City of Columbia in the State of Maryland, USA. However, it is difficult to compare the
economic and demographic profiles that support the Columbia experience and make
this a model for the Bangalore-Mysore corridor. It must be highlighted though that admittedly the Columbia,
Maryland model is not as ideal and successful as claimed or envisioned.[ii]
In 1995, a Memorandum of Understanding (MOU) was signed
between the Government of Karnataka (GoK) headed by Sri. J.H. Patel and, Nandi
Infrastructure Corridor Enterprises (NICE), a consortium consisting of Kalyani
Group (Pune), SAB Engineering (Pennsylvania, USA) and Vanasse Hangen Brustlin
(VHB) (Boston, USA). In March 2001
however upon inquiries as to his company’s involvement in the project, VHB
Board Chairman, Richard Hangen, denied VHB was involved in the BMICP since 1995
and that he did “not know of the existence of any scope defining a future role
for [VHB].” This while project
documents[iii]
dated 1999 include VHB as a member of NICE, and NICE continues to claim on its
website[iv]
that VHB is the “lead engineer” for the BMICP.
Clearly a fraud is being perpetrated upon the people of Karnataka and
potential investors, a fraud that 3 different state governments have perhaps
chosen not to uncover. SAB Engineering
appears to be a small enterprise headed by Mr. Ashok Kheny (also Managing Director
of NICE) and it is unclear what experience it brings to large projects such as
BMICP or what its role would be. It is
not clear why the GoK is risking its credibility by engaging such companies and
such fraudulent practices.
The BMICP will reportedly cost upwards of Rs.2000 crores
(US$400,000,000). For several years it
was unclear who would be financing the project, however, in a 13th June 2002
Economic Times report, Ashok Kheny, Managing Director of NICE claimed that he “expect(s)
the consortium of financial Institutions led by ICICI to release funds to the
2000 crores project upon receipt of the comfort letter allaying their
reservations over various aspects to facilitate early financial closure.” Apart from ICICI, HUDCO, Life Insurance
Corporation, Punjab National Bank and Bank of India are reported[v]
to be financing BMICP. Unit Trust of India and General Insurance Corporation may
also be involved[vi] in the
consortium financing the project. In
August 2002, the Reserve Bank of India filed a case[vii]
against ICICI for its potential violation of an RBI directive on
“Financing of Infrastructure Projects”[viii]. It instructs not only financing institutions
to be wary of project viability, but also State Governments, that their
guarantees (or comfort letters) are not a substitute for reliable appraisal of
viability.
Especially given the use of public assets to finance this
project (for instance, HUDCO financing and the giveaway of government [public]
land to NICE at Rs.10/acre/year), this RBI case against ICICI assumes importance.
On August 1, 2000, the Karnataka State Pollution Control
Board (KSPCB) issued a No Objection Certificate to the project, contingent upon
NICE’s compliance with several conditions.
Several of these conditions are yet to be met. On August 8, 2001 the Ministry of Environment and Forests (MoEF)
issued a conditional environmental clearance for the expressway component of
the project. Several of these
conditions are also yet to be met, and the MoEF is investigating this
matter. Clearances accorded have been
based on faulty Environmental and Social Impact Assessments and farcical Public
Hearings.
For instance, one socio-economic assessment asked just 3
questions: the name of the respondent, the address of the respondent and the
name of the surveyor, and another was based on faulty statistical
sampling. Such “studies” clearly do not
present a picture of the social and economic conditions of the affected
population, and, do not even satisfy the guidelines of the MoEF’s Environmental
Impact Assessment Manual. The Public
Hearings, in particular, were marked by human rights abuses, a matter that was
raised before the National Human Rights Commission.
Basic public domain documents and studies about the project
have been kept confidential, on grounds that they compromise corporate
interest. In such a situation, the
public has little or no opportunity of making a reasoned assessment of the
costs and benefits of the BMIC project.
For a project that has such significant and wide impacts, there clearly
is no responsibility attached in terms of public accountability, an approach
that may well become a liability for potential customers.
Total land acquisition for the project will amount to about
21,000 acres, consisting of agricultural wetlands, and forest land, and
according to various reports, the project will affect almost 200,000 people,
mostly agricultural laborers and farmers.
Of these, only those owning land and who can show proof of title will be
eligible for cash compensation, and these constitute a minority of the total
affected population. Environmental
surveys are based on out-of-date records and out-of context reasonings. For instance, what was once termed
“wasteland”, may have been developed by
local farmers into productive agricultural lands. Yet the BMICP Environmenal Impact Assessment continues to retain
the claim to such land as “wasteland” without actually verifying the quality of
land presently. Furthermore, government
land (i.e. public land) is being given away to NICE at Rs. 10/acre/year for 30
years, yet this land yields more than this amount to those now cultivating
it. Many of the farmers whose lands
would be acquired were not informed of the acquisition by government
authorities. For some whose land will
be sliced by the expressway, they will be forced to walk about 1km to reach the
other side of their land (as underpasses are proposed every 500 metres).
The issue of water is critical, and presents a major
limiting factor in this region. With
the ongoing disputes between Karnataka and Tamil Nadu over Cauvery River water
supply, and with Bangaloreans suffering from erratic and insufficient supply,
it is unclear on what basis the GoK has in the BMICP Framework Agreement (1997)
permitted NICE “to draw 2 thousand million cubic feet[ix]
of water per annum from the Cauvery River allocation.” A recent statement[x]
by Law and Parliamentary Affairs Minister D.B. Chandre Gowda that “Bangalore will
go without water if we release additional water to Tamil Nadu” is further
evidence of the present dire situation.
Recent press reports (June/July 2002) have indicated that
the GoK is pursuing expansion of the existing Bangalore-Mysore State Highway
(SH-17) and doubling the railway track.
The former is estimated at Rs. 331 crore[xi]
(US$ 66,200,000) and reportedly requires acquisition of only 65 acres of land[xii],
and the latter is estimated at Rs. 276 crore (US$ 55,200,000) and requires
minimal land acquisition[xiii]
as most of the land required is railway land.
Both these options are considerably cheaper and involve a great deal
less land than the BMICP. Furthermore,
reviving the shelved HUDCO-Southern Railways proposal of developing housing at
existing railway stations and towns in the Bangalore Mysore region, will surely
meet the growing demands of Bangalore, provided all sections of society
affordable housing and safe travel options, rather than the urban sprawl
proposed by BMICP. Furthermore, in what may be a cannibalistic move, HUDCO is
not only financing BMICP but also reportedly financing the expansion of
SH-17. Given the more equitable and
financially sound options available, it is unclear why the GoK and financial
institutions continue to support the BMICP.
Furthermore, a key justification for the BMICP was that SH-17 could not
be expanded[xiv], which as
has turned out was an absolutely incorrect assumption. Given the ongoing work
by GoK to expand SH-17 with HUDCO financing, it raises questions whether BMICP
is required; and more fundamentally if it is viable at all.
NICE appears to be canvassing the NRI diaspora to encourage
investment in property along this corridor.
It is critical that potential investors have complete and accurate
information about all aspects of their investment. Given the large-scale adverse social, environmental and economic
affects of the BMICP, when viable and less damaging alternatives exist, BMICP
stands out as an extremely controversial project not only in the eyes of
residents of Karnataka, but also of people around India and the NRI
community. Seven years have passed and
yet the project is nowhere near financial closure, if that is some evidence. But for a large section of potential
investors who would perceive the project as only an investment opportunity, the
likelihood of seeing their money grow seems rather remote presently. Probably the best evidence for this would be
the fact that the 6-lane expressway of the BMICP is unlikely to take off, as
the Minister for Public Works of GoK has confirmed lately that only 2 lanes
would be developed presently, and not all the way to Mysore. The issue of
whether the townships will ever take off hangs fire.
For more information on the BMICP including representations,
reports, letters and press articles/releases please visit http://www.indiatogether.org/campaigns/bmic
Unless a critical mass of public pressure is placed upon project
promoters and decision-makers to critically evaluate the viability of the
project, it is likely that the GoK may support BMICP shrouded in secrecy, and
thus inherit the greatest financial disaster from an urban infrastructure
project. The burden would be borne
physically and economically by the project affected forever, and financially by
citizens of the State. It is only
appropriate that the Chief Minister of Karnataka comes clean on this deal, and
Mr. Ashok Kheny, MD of NICE Ltd. provides clear evidence to the viability of
this project. Raising awareness in
various public fora such as newspapers and magazines would be fundamental to
precipitating such highly desired changes, and bringing some transparency and
accountability into the decisions on the BMICP.
Some key issues that may be raised include:
o
Given the passing of the Right to Information Act why is
basic information about BMICP still not available to the public?
o
Why is the Government of Karnataka supporting BMICP when
more equitable options for development of this corridor exist, from both a
transport and housing angles?
o
Why does the Government of Karnataka continue to support the
project despite its violations of the Environmental Protection Act (1986)? For
instance, public hearings were not conducted as per the provisions of the Act
and Environmental Impact Assessment and Socio-economic Assessment were not
conducted satisfactorily.
o
Why is the Government of Karnataka promoting high risk and
flamboyant investments, particularly by questionable companies? (VHB claims
non-involvement while NICE claims VHB is “lead engineer”; SAB Engineering is a
very small enterprise which may not have experience of large projects such as
BMICP)
o
If VHB is, as it claims, not involved in BMICP, then the
Memorandum of Understanding signed in February 1995 is null and void, thus how
can the project go ahead?
o
Why is the Government of Karnataka giving away public land
at Rs. 10/acre/year? Where this
government land is under cultivation by local farmers, the income earned by
them would be greater than the rate charged to NICE.
o
Has the Government of Karnataka considered that it may be
violating a binding RBI directive by wrongly issuing high risk State Guarantees
in lieu of satisfactory assessment of financial viability?
o
Has NICE considered that as per a binding RBI directive,
financiers cannot fund BMIC based on comfort letters (State Guarantees)?
o
Why are public funds being used (HUDCO is a public sector
enterprise) for a private project for which the public have not been
satisfactorily consulted, and for which public domain documents have not been
released?
o
How can the Government of Karnataka guarantee (as per the
Framework Agreement) 2 thousand million cubic feet to a privileged 500,000
people in BMICP townships while 6,000,000 Bangaloreans have an erratic and
insufficient water supply, particularly in the context of the ongoing battle
over Cauvery waters?
o
Why is the GoK committing so much land to this project, when
NICE Ltd. has been unable to even deposit the small security amount required
per the land acquisition process?
o
Also, why is this projected exempted from providing
rehabilitation to affected families?
o
Finally, is BMIC required now that SH-17 is being expanded,
and the Bangalore-Kanapura-Coimbator/Mysore road is being upgraded as a 4 lane
National Highway?
This note has been prepared in the wider
public interest by Leo Saldanha and Nagini Prasad of Environment Support Group.
This may be freely quoted, disseminated, and used in any manner, so long as the
arguments are quoted appropriately.
Contact Address:
Environment Support Group ®
S-3, Rajashree Apartments
18/57, 1st Main Road, SRK Gardens
Bannerghatta Road, Jayanagar
Bangalore 560041
Telefax: 91-80-6341977/6531339
Email: esg@bgl.vsnl.net.in
[i] “Proceedings of the Government of Karnataka, Sub: Implementation of the Bangalore-Mysore Infrastructure Corridor project under BOOT concept”, Clause 5.0 and 8.0, Annex 2 to the Executive Summary of the Environmental Impact and Socio-economic Assessment Report for Bangalore-Mysore Infrastructure Corridor, by MECON Ltd., October 1999
[ii] “30 years and counting”, Columbia Flyer, June 19, 1997
[iii] Environmental Impact and Socio-economic Assessment Report (Comprehensive Report) for the Bangalore-Mysore Infrastructure Corridor, by MECON Ltd., September 1999
[v] “Mysore-B’lore road project achieves fin closure”, Economic Times, August 16, 2002
[vi] Centre for Monitoring of Indian Economy - Survey of Investment Projects – Infrastructure, August 2000
[vii] RBI Case No. 105/16.8.2002
[viii] Circular No. IECD No. /08.12.01/2001-02 dated 20 February 2002
[ix] Framework Agreement, 1997
[x] “TN charged with filling up 600 tanks”, Deccan Herald, October 06, 2002
[xi] “Govt. opts for Rs. 331-cro. 4-lane highway”, The Hindu, June 30, 2002
[xii] Personal communication with official from Karnataka Road Development Corporation Limited (KRDCL), July 2002
[xiii] “Doubling of railway track to be speeded up”, The Hindu, July 01, 2002
[xiv] Environmental Appraisal annexed to the Environmental Impact Assessment in section “Alternative alignments/sites examined”