Matthew Shutzer

It’s not just repressive policing that connects climate struggles, but global policy frameworks that have privatized the earth’s resources. 

Around 5 am on October 1st, Indian police officers fired 68 rounds into a crowd of peaceful demonstrators protesting the expanded coal mining of the Karanpura Valley by the National Thermal Power Corporation. The shooting, and the panic that followed, left five dead. Farmers around the Karanpura Valley in the Indian state of Jharkhand have been protesting the NTPC since the mining site was awarded to the firm in 2004. This is the third time since 2013 that police have fired on farmers peacefully protesting the project. Open-cast mining in the Karanpura Valley has made many parts of this once lush, heavily-forested, and well-irrigated landscape uninhabitable. Methods used by the NTPC and other coal contractors have destroyed cropping areas, polluted river-systems, and encroached upon wildlife sanctuaries across three districts. Farmers allege that the NTPC, which is a government-run power company supported by World Bank financing and policy guidelines, have been using police to forcefully acquire land on behalf of a private coal company, Thriveni Earthmovers. Grassroots mobilization against the mine forced out an Australian coal-mining company in 2014, but now, under new Prime Minister Narendra Modi, it appears the Karanpura project will go forward, at whatever cost.  

From Standing Rock to Jharkhand, energy companies and compliant governments are at the forefront of the fight against democratic control over our collective energy futures. Both of these struggles demonstrate how the collapsing of public institutions and powerful private interests enable the expanded exploitation of natural resources and historically disenfranchised communities. Increasingly, activists in the midst of these struggles are helping to expose what once appeared to be discretely national events as conflicts generated by the global economic compulsions of neoliberal finance and the institutions that leverage energy policy in the world economy. 

People on the right and left in India today often justify, or ignore, India’s extreme dependence on coal as a necessary function of a developing economy attempting to lift millions out of poverty. India is the world’s third largest producer and consumer of coal after China and the United States, and the vast majority of this coal production goes towards powering India’s complex electricity grid. Since Prime Minister Narendra Modi came to power in 2014, the Indian Government has pledged to double coal production by 2020 to one billion tons per annum. While most observers doubt Modi will achieve the 1,000,000,000 mark, the ramping up of coal production to decrease costly coal imports has begun. India is set to consume the carbon space it was allocated by the Paris Accords by 2030; an amount that was intended to last until 2100.

But whereas the need for cheap sources of energy in the developing world is an urgent policy consideration, the sacrifice of places like the Karanpura Valley are not the result of developmental necessity, but of a global policy framework that has incentivized cheapening and expanding non-renewable energy production since the mid-1970s. Institutions like the World Bank, formerly a major source of non-renewable energy finance for the developing world, now claim that they are committed only to green energy projects and that they will no longer finance coal mining. But these recent actions in Standing Rock and Jharkhand belie the policy environment such institutions have spent decades creating and the further ways in which their financing of electricity infrastructure promotes the expansion of fossil fuel industries in developing countries. The fight against democracy by police and national governments are connected to these broader anti-democratic impulses of global financial institutions. Standing Rock and Jharkhand are just two of the most recent examples of the need to fight against the continued privatization of natural resources and to force global climate negotiations to reckon with the global failure of the energy privatization model. 

Modi’s Power Grab

In the early 2000s, two events catalyzed Narendra Modi’s ascendancy in Indian politics. The first event was the 2002 Gujarat riots, in which several thousand Muslims were murdered by cadres associated with Modi’s political party, the Bharatiya Janata Party (BJP), while Modi was the Chief Minister of the state. The second event, far less horrific, was the passage of the Electricity Reform Act of 2003 by the then BJP-led national government. Under this reform, which opened the Indian power sector to privatization, Modi created his flagship Jyoti Gram Yojana (JYG), a program to bring 24x7 electrification to Gujarat’s rural areas. It was the unique success of this program combined with the 2002 pogrom that catapulted Modi to the vanguard of the BJP’s national political machine as a World Bank darling and decisive leader of India’s business class. 

Throughout the 1990s the World Bank and related institutions aggressively pushed a new program of power sector liberalization largely drawn from the success of similar reforms in Latin America, many of which were undertaken first by the Pinochet dictatorship in Chile during the 1980s. This power sector liberalization did not just target the Global South however. In the quest for globally interlinked market mechanisms for electricity distribution, these reforms swept from California to England to India and beyond. In the process, electricity liberalization bankrupted state governments and helped to create mammoth energy firms, such as Enron in the United States and Adani Enterprises in India.  

In India, the first phase of a general economic liberalizing program begun in 1991 led to a decades-long decline in central government funding for state administered electricity boards. Central funding for the boards largely helped to repay subsidies for rural consumers of electricity who could not pay for non-subsidized power connections. In the absence of these funds the World Bank and the Asian Development Bank entered the Indian power sector in 1996, dividing India state-by-state with power sector loans on the condition that state electricity boards would be “unbundled.” Unbundling meant that state assets for generation, transmission, and distribution could be de-regulated, or transferred as individual assets to potential private buyers. 
After passing a new power licensing agreement in 1991, one of the first experiments in electricity privatization was a 1992 $3 billion Enron – Reliance Industries partnership to build a natural gas power plant in the western Indian state of Maharashtra. The Dabhol Power Project was mired in scandal from the beginning, as project coordinators stood accused of bribing the Indian petroleum minister in 1993 to gain unrestricted access to offshore natural gas reserves. Fearing that the tariff set by the private companies would bankrupt the state, the Maharashtra state government ultimately pulled out of the project in 2001, months before Enron collapsed amidst revelations of its elaborate Ponzi scheme. Even as Vice President Dick Cheney and the U.S. Treasury Secretary tried to recoup $200 million in losses from the Indian government on behalf of Enron’s executives, the New York Times ran an astonishing article proclaiming that the failure of the Dabhol project exemplified the corruption of Indian state interests in the power sector.

But the first Indian state to embrace the full mandate of the World Bank’s reform project and its loan restructuring was the eastern Indian state of Orissa in 1999. While Orissa state officials had already entered into ‘Power Purchase Agreements’ with private firms for power generation, in 1999 the state government began selling off its underperforming distribution assets. The buyers were the Virginia based American Energy Storage (AES) and Anil Ambani’s Reliance Infrastructure.

In 1999 what was emerging as the Orissa Model of electricity reform was derailed by a supercyclone that hit the state on October 29, a ‘Black Friday’ disaster that killed over 10,000 people. A significant percentage of the coastal distribution network was also destroyed. The American company, AES, was a given a break on its tariff payments during an exceptional reconstruction period for the lost infrastructure. But in 2001 the company walked out on its commitment to rebuild or to repay, refusing even to honor the provident funds or pension contributions of its employees. Just last year, the remaining private player in the Orissa distribution scheme, Reliance, had their electricity license cancelled for their gross failure to offer competitive electricity rates, according to the Orissa Electricity Regulatory Commission. Now, as Reliance is expected to exit the power sector completely, the outstanding debts of this privatization experiment are being returned to the public in the form of rising electricity tariffs.

Modi’s Gujarat, however, has been championed as the exception to these otherwise disastrous results. After the passing of the national electricity act in 2003, Modi secured an Asian Development Bank loan to begin electricity unbundling. One of his first privatization successes was the partial breaking of the Bharatiya Kisan Sangh, a farmers union that had historically secured high electricity subsidies for rural areas.1

According to the Business Standard, between March 2004 and January 2013, Gujarat’s power capacity grew by 166%, far outpacing other Indian states during this period. The same paper also notes that during this period the share of private business in the power sector overall shot from 25% to 60%. As Modi led private business in the takeover of underperforming government assets, such as thermal power plants previously built by funds from the public exchequer, the state growth rate during his tenure averaged 13.4% (the national rate was 7.8% for this same time).  

Gujarat’s exceptionally unequal growth under Modi can be tracked by following the emergence of Gujurat’s energy scion and close confidante of now Prime Minister Modi, Gautam Adani. Gautam Adani’s Adani Group benefitted more than most by the discounted sell-off of public infrastructure. Under Modi’s government, the Adani Group’s annual revenue rose from $765 million in 2002 to $8.8 billion in 2013, according to a Forbes report. Part of Adani’s spectacular growth was the result of his receiving a 7,350 hectare Special Economic Zone land grant in Gujarat’s Gulf of Kutch at appallingly discounted land rates. Adani used a portion of his boon to build the world’s largest coal importing facility, the Mundra Terminal, and has also let out the land at profit-making rents to other non-renewable energy firms.

Next to the Mundra Terminal is Adani’s own 1,980 MW thermal power plant and the Tata group’s 4,000 MW “ultra-mega” power plant. Both plants run on imported coal from Indonesia and both companies have been embroiled in near-constant litigation from displaced communities in Mundra since their project clearances by the Modi state-government. In 2015, fishing communities affected by pollution and displacement by the Tata plant sued the International Finance Corporation, the World Bank’s private lending section, in federal court in Washington D.C. over their $450 million loan to Tata Power. Despite the destruction of the marine habitat around the port by falling fly ash, water pollution, and the over-salination of grazing lands, the U.S. court found the IFC immune from such litigation in March of this year.            

When Modi became Prime Minister in 2014, energy stocks on the Bombay Stock Exchange soared. But while Modi has staked a great deal of his political credibility on applying his Gujarat fix to all of India, it remains unclear how far the privatization model of electricity can carry on. Reliance’s exit from Orissa is one of the biggest shocks, but states from Tamil Nadu to Rajasthan continue to reel under losses in the electricity market. Whether or not private capital will be forthcoming to fix these losses, the Orissa case shows once again that private companies are risk averse in undertaking the electrification of states with vast, unconnected rural populations. But the Modi government continues to insist that further privatization is the way forward, even signing an agreement recently with the World Bank for further ‘unbundling’ in Rajasthan and amending the Electricity Act of 2003 to allow private firms easier entry into the power sector.  

Mainstreaming Corruption: The Market Solution to the Energy Crisis

The privatization model of the power sector cannot be understood without linking electricity generation to its primary energy source: coal. Coal accounts for approximately 70% of India’s electricity generation. In 1972, then Prime Minister Indira Gandhi nationalized India’s coal mines in response to the global oil crisis and rising union militancy in the mining sector. Hoping to reduce and control costs for power consumers, Gandhi’s nationalization drive extended the government’s monopoly by setting up massive asset management companies, the largest of which was Coal India Limited (CIL), and introducing widespread open-cast mining as a mechanized alternative to more labor-intensive underground methods. Today, CIL accounts for almost 82% of all of India’s coal production.

As Prabir Purkayastha has argued, the passage of the Electricity Reform Act in 2003 began the process of creating a vertically-integrated market for power in India, linking electricity consumption, distribution, and generation with a highly subsidized, government controlled market for coal. As private firms entered the power market to sell electricity through newly established power exchanges, this put pressure on the government to reduce its stake in subsidizing coal prices and thus to allow private firms to compete in the power market as operators of coal mines. Turning electricity into a tradeable commodity required similar market pressures to be applied to the coal sector.  

But this utopic market mechanism for Indian coal never emerged as its liberalizing ideologues projected. Instead, government control of coal allocation led to a sell-off of India’s coal to all of the major Indian industrial houses – Tata, Reliance, Birla, Jindal, Essar – at rock-bottom prices. Allocation of coal-blocks to private firms first began in 1993, in the aftermath of the liberalizing program pushed on the Indian economy by World Bank partisans and then Finance Minister Manmohan Singh. Between 2004 – 2009, the first years of Singh’s tenure as Prime Minister, the Comptroller and Auditor General of India reports that the worst losses to the public exchequer due to below-market allocations occurred. According to Purkayastha, “government transferred about 44 billion metric tons of coal to private capital gratis – about 6 – 7 times the annual production of the world!”

The investigation into the Singh government’s preferential allocations later became dubbed “coal-gate” and helped to establish the anti-incumbency sentiment that propelled Modi and the BJP to national power in 2014. The effects of coal-gate are still being felt. Having established a special court to deal with the fraudulent allocations, the Central Bureau of Investigation has just in this last year brought charges against the industrialist R.C. Rungta, as well as three ministers for the state of Jharkhand. The most spectacular prosecution of all has been that of Naveen Jindal, chairman of the massive Jindal Steel and Power, who was serving as a member of India’s upper parliamentary house when his company was awarded favorable coal blocks.

But the Modi government’s response to coal-gate has not been a radical policy break. Rather Modi and his ministers have simply sought to deepen the privatization model, bringing the coal sell-off from the backroom to the front page. Modi’s government has begun auctioning coal-blocks to private bidders in what they claim represents transparent procedure, while simultaneously selling government stake in Coal India Limited in order to service the government’s budgetary shortfall. 

The $27 billion sell-off of CIL is designed to introduce greater competition into the coal sector, raising productivity to reach Modi’s 1,000,000,000 tons per annum goal by importing new machinery and outsourcing work. The unionized workforce in the mines, representing 371,000 miners, cut India’s coal production in half by striking against these reforms in early 2015. Future actions still loom.
Meanwhile, Modi’s privatization putsch comes as the World Bank announced in 2015 that they would no longer finance any new coal projects in India, claiming to now embrace ‘green’ alternatives to energy development programs. Now that the Bank has spent almost 30 years producing a policy environment conducive to privatization, they can wash their hands of dirty coal. Initially, the World Bank partnered with Coal India in 1998 to finance 24 coal projects through a $1 billion loan. The Bank’s biggest impact in the coal sector was to restructure the compensation rules for coal-land acquisition. Whereas before CIL attempted a land-for-jobs exchange for displaced farmers, the Bank required a new policy of providing loans to displaced persons so they could become, in the Bank’s language, village entrepreneurs. Despite mutual recriminations by both the Bank and the Government of India on the complete failure of this policy during an early 2000s review, a full redressal of the compensation problem is yet to be undertaken.
Even as Modi has, following in the Bank’s footsteps, ramped up environmental clearances for mining projects and pushed a controversial pro-business land compensation bill, for many of India’s private firms this is still not enough. In India’s major coal producing states, farmer opposition to new coal mines challenges the marketization of coal at every step. Just last year, Reliance Power pulled out of a massive 3,960 MW power project in Tilaiya, Jharkhand due to delays in land acquisition. It was in Tilaiya in 2011 that a Reliance official was assassinated by an alleged Maoist affiliated group. This political unrest has become so commonplace that in the new coal-block auctions, the auction price of coal in “Maoist affected” areas has been artificially lowered in order to account for potential land-buyers paying off local guerilla cadres for protection. But the Maoist threat has become most pernicious by providing public justification for extreme acts of police violence against peaceful protesters. In the recent Karanpura Valley killings, police alleged villagers had been incited, and potentially armed, by a local Maoist splinter group. Of course, no evidence of this connection has been produced.  
In order to loot the coal-belt to power India’s cities, India’s industrial firms still require the political power of public institutions like Coal India Limited to take on the risks of land acquisition, compensation, and police protection. But even where land acquisition has stalled, there are still profits to be made in compromise. Just this last May, approaching by-elections in Jharkhand led to the temporary shelving of an Adani Enterprises 1600 MW power plant as 2,000 villagers in the Godda block protested its construction. Observers have suggested now that the elections have passed, Adani’s memorandum-of-understanding with the state will come into effect. The power plant is slated to only provide 25% of its installed capacity to Jharkhand, at tariff rates subsidized by the state government. For the remainder of the electricity, Adani has been given approval to export it to Bangladesh. Meanwhile, coal reserves near the plant’s construction site will not be used by the Adani plant but will be sent for re-sale to the company’s coal terminal in Mundra in Gujarat. Instead, Adani will import coal into coal-rich Jharkhand to sell electricity to Bangladesh. This is the true profiteering face of the privatization model.

Carbon Equity in a Neoliberal World

For all of the claims that mining coal in India is a developmental issue required to benefit the world’s poorest, it seems the privatization model is not up to the task. Affordable rural electrification simply will not come through the deepening of an integrated power market, but cheap coal for India’s middle-classes certainly will. In the absence of an alternative policy paradigm, the state is left to subsidize increasingly impoverished infrastructure and to hold open the door to private firms to take whatever it is they desire, frequently at the expense of rural livelihoods. 

In global climate negotiations, carbon equity is the policy name for the understanding that nations have contributed unevenly to the global carbon space and that industrialized nations have historically acted as the world’s largest carbon emitters. As such, it is argued, countries like the United States must take a more aggressive approach to the transition to renewables, allowing countries such as India a longer period of transition.

Carbon equity is a self-evidently just argument, but it is also an insufficient way of conceptualizing economic justice. In the context of neoliberal finance, opportunities to make profits from exploiting non-renewable energy resources are not constrained by national boundaries. The raising of fossil fuels by private interests does not necessarily translate into pro-poor developmental outcomes, but may in fact work to create an even more unequal society. Although there has been much excitement generated by the prospects of divesting from banks and other institutions that finance fossil fuel companies, recent events suggest that divestment is simply another way of inflicting financial constraints on developing nations and forcing the expanded exploitation of dirty energy through cheaper and more destructive mining methods. Divestment thus can function to further cede market share to national capitalist classes, like the Adanis in India, rather than actually shifting market behavior in the short term. Even if divestment will reform energy-surplus nations, its delimiting of broader and more progressive solutions in the developing world appears to be quite significant.

The idea that we can provide market-oriented carrots to spur the global energy shift ignores the complicated ways in which energy markets have been generated and sustained by an international policy environment of resource privatization. We need to democratize economic policy, not deepen marketization. What is needed most of all is not a new investment strategy, but a removal of energy resources and power distribution from the marketplace as it is currently conceived. Out-of-touch as this may sound, it is not inconceivable for a coalition of national governments to argue, on the grounds of making large-scale renewable investments, for a selective delinking from global energy markets and to engage in new forms of transnational resource provisioning. Indeed, it was this type of South-South solidarity that enabled the first wave of resource nationalization among decolonizing nations in the 1950s, and which continues to animate even market-oriented institutions like the BRICS development bank. It is also precisely the complex market-state configurations of the Chinese state that have allowed it to make such a dramatic pivot away from increasing coal production, despite the long-term trajectory of this policy shift remaining unclear.  

So long as the profit motive is what drives the logic of policy reform, local people from Standing Rock to Jharkhand will be faced with the direct violence of those institutions that stand against democracy. For resources and infrastructure that concern all of us, the market will not distribute justice, as it has not distributed equitable economic growth. Its inefficiency as a mechanism for securing our futures is plain to see.      

Matthew Shutzer is a doctoral student at New York University writing a history of energy commodities in South Asia. More information about his current research and past projects can be found at:

1. See Sunila Kale, Electrifying India: Regional Political Economies of Development (Palo Alto: Stanford University Press, 2014): 161 – 162.