Greens oppose SBI's proposed $1-bn loan to Adani's Australian project
08 December 2014
The State Bank of India (SBI) will decide on the controversial $1-billion (Rs6,200 crore) loan agreement with Adani Group for in the next two to three months amidst fresh challenges from green activists to the Gautam Adani Group's Australian mining project.
Adani's coal-cum-rail road mega project in Australia has been facing challenges from green activists from the beginning and Avaaz, an environment campaign network, has promised to build public opinion against the project through a massive signature campaign and force SBI to back out (See: Adani meets green hurdle in $15.5-bn Australian coal project).
Adani Enterprises, India's largest coal importer, had bought the Abbot Point Terminal in Queensland - one of the country's bigger coal terminals - for about $2 billion in May 2011 in an attempt to meet rising demand for coal.
The project also recently drew public criticism after the State Bank of India (SBI) signed an initial loan deal with Adani for $1 billion (See; After Queensland nod, Adani lines up $1 bn from SBI for coal project).
SBI signed the pact with Adani Group on the sidelines of Prime Minister Narendra Modi's visit to Australia. But SBI said it was only a memorandum of understanding and a loan for the project will depend on so many parameters (See: Adani's Aussie coal project may take off after Modi visit).
The environmentalists' objection to the project is mainly due to the proposed dumping of millions of tonnes of sediment generated in the mining process near the delicate Great Barrier Reef, potentially endangering the world heritage site.
While the project will help unlock coal reserves worth billions of dollars, the dumping of sediments will destroy the world's largest coral reef system comprising over 2,900 individual reefs and 900 islands stretching for over 2,300 km over an area of approximately 344,400 square km, say Avaaz.
"Adani is asking our biggest public sector bank for a loan of Rs 6,000 crore to turn one of the world's ecological treasures into a major coal shipping lane. But if we act fast, we can block this dirty deal and keep the Great Barrier Reef safe," said Danny Auron of Avaaz.
"Public pressure has changed other banks' minds, so let's turn the heat on the SBI," he said, in a letter addressed to the Indian public. According to Avaaz, the wild coal rush that Adani's project symbolizes is toxic for the planet. Coal is the dirtiest fossil fuel, and to get the coal to India, Adani would need to expand a shipping lane right through the Reef - the largest living organism on Earth and home to thousands of protected species.
"To make matters worse, after international lenders like Citigroup and Deutsche Bank shunned the project, Adani has turned to state-owned SBI hoping for a sweet deal," said Auron.
A few months ago, Deutsche Bank had refused to fund Adani' plans in Australia. Juergen Fitschen, Deutsche Bank's co-chief executive, had told shareholders that the bank would not be involved in the Abbot Point project, which the world heritage agency UNESCO has warned risks damaging the fragile ecosystem of the reef, according to a report in the Financial Times.
"There is no consensus between UNESCO and the Australian government regarding the expansion of Abbot Point in the vicinity of the Great Barrier Reef. Our policy requires such a consensus at the least. We therefore would not consider applications for the financing of an expansion any further," the FT reported quoting Fitschen.
India's coal minister had recently announced that India should be able to phase out coal imports in the next three years.
"The executive committee after due deliberations will decide about the disbursement to Adani," PTI quoted SBI chairperson Arundhati Bhattacharya as saying.
"At present, all the aspects are being studied. Appraisal is being done. It will take about two-three months to study the project and thereafter taken to the committee for final approval," she added.
Adani Mining is building a 300 km rail line for its $16-billion Carmichael coal mine project in Australia. The combined project cost is estimated at $7.6 billion.