Sun, Oct 03, 2004 - Page 11 News List

UK bank embroiled in controversy over Indian dam

ENVIRONMENTAL CONCERN Barclays Bank denied that it was providing finance for a project that would force up to 50,000 people from their homes

THE GUARDIAN , LONDON

The UK's Barclays Bank was on Friday accused of playing a vital role in the financing of an Indian hydro-electric dam which will force up to 50,000 people from their homes.

The Omkareshwar dam project, one of a series of large dams on the River Narmada in the central Indian state of Madhya Pradesh, will flood 30 villages and 240km2 of forest and farmland.

According to papers seen by the London-based Guardian newspaper, no impact study has been done and no resettlement plans have been finalized.

The World Bank, Deutsche Bank and ABN Amro have all refused to finance Omkareshwar and other large dams on the river because of environmental and social concerns.

Protests have been going on for more than ten years in the Narmada region, with thousands of people threatening to drown themselves rather than leave their homes.

Activists such as the author Arundhati Roy have been imprisoned for trying to stop the dams, which would eventually force the relocation of more than 600,000 people.

According to documents seen by the Guardian, the Indian government had asked Unit Trust of India and Barclays to help arrange the finance for the dam, to run over 14 years.

On Friday, in a statement, Barclays denied lending any of its own money to the scheme and claimed that its mandate from the Indian government had lapsed.

"As Barclays is neither providing finance for the project nor arranging finance we cannot comment further," it said.

However, the bank did admit "advising and assisting" in the project. A spokesman would not confirm the extent of the fees earned in the deal.

Barclays also helped arrange a ?28 million (US$50.37 million) loan for the corporate expenses of India's National Hydroelectric Power Corporation, the main sponsor of the scheme. It is unknown whether any of this money is being used for the Omkareshwar dam.

The dam is intended to provide more than 500MW of electricity and to irrigate 147,000 hectares of land. It is already encountering concerted opposition by villagers. Rallies and demonstrations are expected to increase as construction nears completion in 2008.

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