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World Bank Document Public Disclosure Authorized Report. No. 14159 PROJECT COMPLETION REPORT INDIA NARMADA RIVER DEVELOPMENT - GUJARAT Public Disclosure Authorized SARDAR SAROVAR DAM AND POWER PROJECT (Credit 1552-IN/Loan 2497-IN) Annexes to Part I, and Part III March 29,1995 Public Disclosure Authorized Public Disclosure Authorized Agricultural Operations Division Country Department 2 South Asia Regional Office 85 Annex 1 Page 1 of 40 PROJECT COMPLETION REPORT INDIA NARMADA RIVER DEVELOPMENT - GUJARAT SARDAR SAROVAR DAM AND POWER PROJECT (Credit 1552-IN/Loan 2497-IN) ENVIRONMENTAL INPACTS AND MANAGEMENT I. Project Background and Environmental Context 1. At the time the Sardar Sarovar Dam and Power Project was being prepared and appraised, the environmental regulatory regime in India and the Bank's operational guidance mechanisms with respect to environment were still being formulated, or were in the early stages of implementation. For example, the Bank's Operational Manual Statement 2.36 was not promulgated until May 1984. It describedenvironmental concerns as "those pertainingto the natural and social conditionssur- rounding all organisms,particularly mankind and futuregenerations. These concernsencompass humanecology and occupationalhealth and safety." Recognizingthat someenvironmental effects may not becomeidentifiable for a long time, the 1984manual stated that the environmentalaspects of projects should be consideredin a longer time-framethan may be appropriatefor most other aspects of cost-benefitanalysis. In particular,the OperationalManual specified that projectswith unavoidableadverse effects on the environmentshould containan outline of measuresneeded to avoid or mitigatethese effectsas well as a componentto implementthese measures.This statement was subsequentlyreplaced by an EnvironmentalOperational Directive in 1989,which was in tum strengthened and made more stringent (with respect to operational requirements) in September 1991. 2. In India meanwhile,a similarevolutionary process was underwaywith respect to environ- mental management. Several national committeeshad analyzed aspects of India's deteriorating ecology, particularlyadverse impactson forest cover and made recommendationsfor mitigation measures. Theseculminated, among other things,in the establishmentof a Departmentof Environ- ment and Forests (MOEF)in the Central Governmentand the issuing of the Forest Conservation Act in 1980. It was not until 1985,however, that the growing public environmentalawareness and concem resultedin forceful action at the center - in January of that year, a new Ministry of Environment and Forests (MOEF) was establishedand the Prime Ministerhimself assumed the portfolio. Among other responsibilities, the new ministry was charged with environmental clearanceof selecteddevelopment projects. A year later, in 1986,the Govemmentof India passed the Environmental(Protection) Act, 1986,empowering the CentralGovernment to take necessary measuresfor protectingthe qualityof the environmenL 3. During the periodleading to the projectapproval by the Bank in 1985,a numberof environ- mental studies were prepared by the Borrower to obtain the environmentalclearance. These studieswere undertakenby the StateGovernments (Gujarat and MadhyaPradesh particularly) and relatedprimarily to impactson fisheries,flora and fauna. But the environmentalclearance was not providedand more studies were to be prepared. In any event, the projects were approvedby the Bank's Board in March 1985 and became effective on January 6, 1986 without a formal forest clearancefrom the MOEF. Finally,a conditionalenvironmental clearance was given in MOEF's letter of June 24, 1987 subjectto the completionof several environmentalstudies relating to: (i) re- habilitationmaster plan; (ii) phasedarea catchmenttreatment scheme; (iii) compensatoryafforesta- tion plan; (iv) commandarea environmentalassessment; (v) surveyof flora and fauna; (vi) carrying field capacityof surroundingareas; (vii) seismicity;and (viii) health aspects. The letter noted that existing surveys were incompleteand full details would have to be submitted by 1989 as per an A.nnex 1 86 Page 2 of 40 agreed schedule. It also indicated that the Narmada Control Authority (NCA) "will ensure that environmentalsafeguards measures are plannedand implementedpari pasu with progressof work on projects". Finally,the letter made it clear that the releaseof forestlands for the projectwould be subject to the Forest ConservationAct of 1980and to prior approvalby MOEF. 4. Subsequently,on September8, 1987the MOEFgave the requisiteclearance for the submer- gence of 13,385ha of forested areas by the Sardar SarovarDam subject to the several conditions relatingto: (i) submissionof detailedcompensatory afforestation plans by September30, 1987;(ii) compensatoryafforestation would be doublethe area affected;(iii) preparationof a catchmentarea treatment plan by November 30, 1987; and (iv) no forest lands would be utilized for the resettlement of oustees. This latter condition was in contradiction with the project Legal Agreementsas will be seen in the next paragraph. Finally, in October 1988,the Governmentof India Planning Commission also gave its formal endorsement to the project, again subject to severalconditions relating to environmentas well as R&R. 5. It should be noted that the Bank's appraisal report and legal documents also dealt with environmentalaspects in the followingways: a. the Staff Appraisal Reeportcontained a summary discussion of the project's environmentalimpact focussing particularly on fish and fisheries, the reservoir, forests and wildlife,public health, water distributionand drainagenetwork, training (ref. Annex 1, SupplementaryVolume L pages 52 to 55); b. the StaffAppraisal Report also requiredthe preparationof an environnental work plan for environmental effects anticipated including training programs for responsible staff and a watershed managementstudy. (SAR p.29 and Table 22 p.102); c. the DevelopmentCredit Agreement (Credit 1552-N. May 10. 1985) calledfor the Borrower to provide forest land, if necessary,in carrying out the project (Section 3.02); and d. The Gujarat Project Agreement (Credit 1552-IN/Loan2497-IN both of May 10. 19i8 calledfor Gujarat in collaborationwith MadhyaPradesh and Maharashtrato prepareand funiishthe Associationfor approval: i. by December31, 1985an environmentalwork plan to includesuitable training programs for project staff in all the three States (includingplans, schedules, costing, etc) [Section 2.11 (a)]; ii. by December 31, 1985, studies and implementationschedules for fish and fisheries,forests and wildlifeand public health aspects[Section 2.11 (a)]; and iii. suitabletraining programsand called for Gujarat to implementsuch approved programs in collaboration with Madhya Pradesh and Maharashtra [Section 2.1I (b)]. 6. The deadline for submissionof these covenants WaSformnally amended to December31, 1989. Annex 1 87 Page 3 of 40 II. Project Implementation 7. The project was regularly supervised at six-monthly intervals by Bank missions from inceptionto Creditclosure. In 1985 to 1987,the Bankput much pressureon GOI for releasingthe environmentalclearance so that constructionworks could starL The clearancecame on June 24, 1987. The first Bank review of the environmentcomponent was made in October 1988 and, as the projectwas not performingwell on several fronts, the Bank and the Borrowersigned a Memo- randumof Understandingin December 1988which stated that (i) a comprehensiveenvironmental frameworkand its subsequentinstitutionalization in the concemed states should be prepared;(ii) studies on fisheries, forest, wildlife and health should be initiated or completed; (iii) appoint an EnvironmentalDirector at the newlycreated SSNNL; (iv) an EnvironmentCell should be createdin the MOEFto monitorthe activitiesof SSP; and (v) the recruitmentof an expatriateenvironmental consultantto assistthe EnvironmentalCell in preparingthe environmentalframework stipulated in the legal documents.However, the meetingalso agreed that in view of the creationof the Environ- mentalCell it wouldnot be necessaryto engagean environmentalspecialist in NCA. 8. During that period, the Bank commissionedin 1987 an overview of the environmental aspects of the project to be carried out by an environmentalconsultant. The publishing of the report was delayed for various reasons to 1989. It made a number of observations and recommendationsin particular that the Bank should intensify its supervision and enter into supplementalagreements to strengthenthe environmentalaspects of the projecL 9. On March 31, 1989 theWater Delivery and Drainage project Credit Closing Date was extended by three months and then by one year to July 1, 1990 subject to certain conditions relatingto the releaseof land for R&R in Maharashtra,R&R policiesto be in line with the NWDT award,and other conditionsrelating to RWS. An EnvironmentalReview carried out in April 1989 indicated that the specified time-basedenvironmental work plan was yet to start and its absence was hamperingthe monitoringof environmentalstudies. It insistedin an action letter to DEA and MOWR that a consultantshould be recruitedas per agreed TOR for preparingthe environmental work plan. It also recommendedthat the plan should be completedbefore institutionalizingthe environmentalcomponents within NCA, MOEFand the three states. The missionrecognized that some progress had been made on the studies on fisheries, compensatory afforestation, and archeologybut none on health. 10. An other environmentalreview
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