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Dhabhol Power Plant - India
"Many energy companies have invested in closed or repressive countries -- arguing that their investment would help develop the local economy and thereby improve the human rights situation. But in this case, Enron has invested in a democratic country -- and human rights abuses there have increased. Enron hasn't made things better for human rights; it has made things worse." Conclusion
Table of Contents

Key Individuals Named in this Report

I. Summary and Recommendations

II. Background: New Delhi and Bombay

III. Background to the Protests: Ratnagiri District

IV. Legal Restrictions Used to Suppress Opposition to the Dabhol Power Project

V. Ratnagiri: Violations of Human Rights 1997

VI. The Applicable Laws

VII. Complicity: The Dabhol Power Corporation

VIII. Responsibility: Financing Institutions and the Government of the United States

IX. Conclusion

Appendix A: Correspondence Between Human Rights Watch and the Export-Import Bank of the United States

Appendix B: Report of the Cabinet Sub-Committee to Review the Dabhol Power Project

Appendix C: Selected Recommendations and Conclusions from the Parliamentary Standing Committee on Energy, May 29, 1995

Appendix D: Correspondence Between the Government of India and the World Bank

IX. Conclusion

Since its inception in 1992, the Dabhol Power project has been at the center of controversy. Persistent allegations of corruption, lack of transparency, the reportedly high cost of electricity, and the project’s detrimental impact on the environment and on peoples’ livelihoods have all played a role in fostering opposition to the project at the international, national, state, and local levels. In 1994-95, as opposition parties, the Shiv Sena and BJP made the project and the aforementioned issues part of their campaign. Once the Shiv Sena-BJP coalition came to power, the government decided that its deal with Enron was acceptable, reversed its previous position and wholeheartedly supported the project—regardless of its own internal investigations or public opinion. Once the state government reversed its stance, people turned to the courts as a remedy for their grievances. The courts, however, did not address any of the controversial aspects of the project. Instead, as the CITU case illustrates, the judiciary would look the other way and dismiss claims rather than adjudicate or arbitrate a case where billions of dollars were at stake—even when faced with substantial evidence of irregularities during this project’s development.

In this context, the demonstrations against the Dabhol Power project represent the last effort by individuals, who cannot match the financial and political influence of a transnational corporation like Enron, to voice their concerns and express their opposition to a project that has a profound impact on their lives. Although the vast majority of protests were peaceful and protected under international standards safeguarding freedom of expression and assembly, the state chose to silence dissent against the Dabhol Power project through arbitrary arrests, beatings, and targeted harassment of opposition leaders, rather than honestly or responsibly address their concerns. The perpetrators of these human rights violations must be investigated and punished.

The state government is not the only actor responsible for human rights violations. These abuses took place as a response to opposition to the Dabhol Power Corporation. In the oil and gas industry, corporations are often called on to respect human rights at the point where their operations and those of abusive forces intersect: when abusive forces are contracted to companies for security; when opposition to corporate activity is met with a repressive response by the state; or when the government refuses to respect human rights in order to give a corporation some advantage. In the case of the Dabhol Power project, all of these factors are in evidence: the Dabhol Power Corporation paid abusive state forces while they committed human rights violations against opponents of the company’s project, and the company directly benefited from the human rights violations. The company’s responsibility in these acts obligates it to publicly condemn humanrights violations and to implement clear and meaningful policies ensuring that human rights violations do not take place as a result of its operations.

Similarly, the institutions that funded this project, namely the U.S. government and private financial institutions, were negligent because they failed to monitor the project for human rights violations while they extended hundreds of millions of dollars in support for it. The U.S. government has a special obligation to ensure respect for human rights because of its stated foreign policy objectives, its considerable lobbying on behalf of the project, and because it seemingly ignored its own regulatory requirements to assess the risk to human rights. As a financier of the project, it should investigate and audit its financing of the project to determine whether any public funds were used to finance illegal activities.

In a general sense, the human rights abuses that have occurred because of the Dabhol Power project underscore the need for all institutions involved—the companies, the home and host governments of the consortium, the public and private financing institutions—to implement binding regulations to ensure that the activities of transnational corporations do not foster human rights violations and to create institutional mechanisms to monitor the effect of investment on human rights.

The case of the Dabhol Power project raises another disturbing issue. Typically, abusive behavior by state forces on behalf of energy companies is believed to take place in relation to companies that, in partnership with highly abusive governments, operate in unstable environments; examples are the activities of British Petroleum in Colombia, Shell in Nigeria, or Unocal in Burma. Often, the argument used to defend doing business in such climates is that increased foreign investment is the best way to improve human rights.

The Dabhol Power project is not located in an unstable or conflicted area, nor is DPC a partner with a repressive government. India is the world’s largest democracy, with a vigorous civil society, a general culture of human rights, legal protections, an active judiciary, and an acceptance of free expression and peaceful assembly. If increased investment necessarily leads to improvements in human rights and respect for the rule of law, then how can the human rights violations as a result of the Dabhol Power project be explained? The conflict that has taken place in Ratnagiri district, indeed, has flowed directly from the conduct of the DPC and the state. Opposition by villagers who saw their lands seized and their waters polluted and diverted also began with, and is attributable to, the requirements of the DPC project. The abuses visited upon dissenting villagers also are traceable to the supposedly beneficial investment by the parent-company of DPC, Enron.

The Dabhol Power project may teach a lesson to governments and companies who lobby for business and investment: Unless an explicit and programmatic commitment to human rights exists, respect and protection for these rights will not improve, and may deteriorate, even in countries that are considered democratic and open.