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Panel recommends Coke not be allowed to resume operations

In a major setback to Coca Cola, a Kerala government panel on Monday said the soft drinks giant must pay Rs 216.26 crore as compensation for the "multi-sectoral" loss caused by its plant in Palakkad and recommended that the dysfunctional unit not be allowed to resume operations as it is located in a drought-prone area.

business Updated: Mar 22, 2010 22:04 IST

In a major setback to Coca Cola, a Kerala government panel on Monday said the soft drinks giant must pay Rs 216.26 crore as compensation for the "multi-sectoral" loss caused by its plant in Palakkad and recommended that the dysfunctional unit not be allowed to resume operations as it is located in a drought-prone area.

The 14-member Committee of Experts, headed by Additional Chief Secretary K Jayakumar in its report also recommended setting up of a tribunal to take the legal process forward, since it would not be possible for the affected people near the plant to individually fight the legal battle.

Coca Cola has rejected the report, holding that the very panel was set up based on the "unproven assumption" that it had caused damaged in the area.

"It is unfortunate that the committee in Kerala was appointed on the unproven assumption that damage was caused and that it was caused by Hindustan Coca-Cola Beverages," it said in a statement.

The report, handed over to Water Resources Minister N K Premachandran, held that besides heavy withdrawal of ground water, the Hindustan Coca Cola Beverages Ltd plant was harming the farming sector and environment in the area by dumping solid waste.

The panel quantified damage suffered by various sectors due to functioning of the plant from 1999 to 2004 as farm loss (Rs 84.16 crore), pollution of water resources (Rs 62 crore), cost of providing water (Rs 20 crore), health damage (Rs 30 crore), wage loss and opportunity cost (Rs 20 crore).

Though there were sufficient provisions under existing laws to claim damages from the company under the "polluter pays" principle, it would be desirable to set up a "dedicated institution" to adjudicate the individual claims, the report said.

Receiving the report, the minister said it would be placed before the state cabinet to take appropriate steps.

The LDF government had set up the high-level panel in April 2009 to assess the "socio-economic damage" allegedly caused by "exploitation" of ground water by the plant.

By passing sludge as manure,which had contents of cadmium, lead and chromium, the company had not only misguided farmers, but has become responsible for soil degradation, water contamination and consequential loss of agriculture, it said.

The general health of people had been affected with skin ailments, breathing problems and other debilities, it added.

In its statement, the company said "it was unfortunate that the committee in Kerala was appointed under the unproven assumption that the damage was caused and that it was caused by the Hindustan Coca Cola Beverages Private Ltd." Investigations sponsored by the state government and others had examined the issues concerning the Plachimada plant and based on scientific evaluations, its operations had not been shown to be the cause of local watershed issues, it said.