RAIPUR, India (AWW) - Under pressure from water rights activists, India's Chhattisgarh state is looking for ways to undo an eight year old privatisation contract.

   Chhattaisgarh became India's 26th state in November 2001, when it inherited a contract between a private company and a government corporation of the Madhya Pradesh (MP) - parts of which are now included in the new state.

   Under the 1998 Build-Operate-Own-Transfer (BOOT) deal, the MP government transferred jurisdiction of 22.7 kilometres of the Seonath River to Radius Water Limited (RWL) for supplying water to the Borai Industrial Growth Centre, situated some 100 kilometres away from Raipur, the state capital.

   The RWL built a three meter dam, spending about 90 million Indian rupees (around 2 million U.S. dollars) and began supplying water to the industrial area.

   The original plan was to store 30 million litres of water a day (mld), round the year and supply 4 mld to the MP government agency – now the Chhattisgarh State Industrial Development Corporation (CSIDC).

   However, the company was forced to limit the storage at 12 mld owing to problems of land acquisition and submergence. Though it supplied only 1 mld of water to the industrial area it was compensated for 4 mld.

   Activists who have been opposing the deal since it was done in 1998 now say the 22-year contract has failed to account for the needs of about 50,000 people living in 15 villages along the 22.7-kilometre stretch of the river.

   The villagers are not allowed to draw river water for agriculture and domestic uses and in some areas they are also barred from digging wells along the banks.

   "Radius has made our life miserable, we are unable to fish or use water for irrigation," says Ledgu Nishad, from a village of Mahamara. "We can't use the water or even dig our own wells or tubewells," he adds.

   The village is home to about 3,000 fishing families.

   The embankment has also brought an end to a means of livelihood for poor people living below the dam. These people used to collect and sell sand to local builders – which the RWL does not permit anymore.

   "How can the government take away common property and hand it over to a company", asks Gautam Bandopadhya of the Nadi Ghati Morcha (NGM), a group leading the protests against the government deal. "This is a classic case of gross violation of civil rights, and we will not stop protesting until the deal is scrapped," he adds.

   "It is no longer an issue about who is earning how much from water, it is about water rights and the priority," says Lalit Surjan, a journalist who is also a member of Rastriya Jal Biradari (RJB) (National Water Community). "We have to pick between supplying water to industry or the poor people."

   The RWL denies the charges and a company spokesman said people within 200 metres of the dam are not allowed to draw water for security reasons, which apply only within that area.

   "We were given a contract to build a dam and supply water to the state government agency, which in turn supplies to industrial units," said Pramod Agrawal, project director of RWL.

   "We are paid a fee in return. Our concern is purely business and we will leave only after the term in our agreement ends," he adds.

   Chhattisgarh in central India is among the poorest states with very high deposits of coal and other minerals but it had remained neglected by both the central and state governments when it was a part of Madhya Pradesh.

   The RWL project became a major political issue in April 2003 when protests by people demanding a right to use the water from the river, forced the then Chief Minister Ajit Jogi to promise to scrap the deal.

   But it was easier said than done.

   Upon closer examination of the contract, the government realised that a termination could cost it around a billion Indian rupees (about 20 million U.S. dollars).

   Under the pact, in case of termination the government would have to clear all outstanding loans, reimburse paid up equity and also compensate the company for lost profits for the remaining years of the contract.

   Following a change in government in November 2003, the ruling Bharatiya Janata Party (BJP) referred the matter to the public account committee (a committee comprising of state legislators who report to the state assembly) to investigate the matter and recommend a way out.

   The committee's tenure ended in March this year and has recently submitted its report to the assembly.

   "Though there are some ambiguities in the deal, I will first submit my report to the assembly before making any public comments," Ramchandra Singhdeo who headed the investigation, told Asia Water Wire.

   "There are problems with the deal which is why an independent inquiry was ordered," says Hemchand Yadav, the water resource minister of Chhattisgarh. "We will decide the next steps after the report is presented in the assembly."

(END/AWW/IPSAP/RP/BB/150506)