The Supreme Court (SC) in a landmark judgment has directed Northern Power Company (Pvt) Ltd to pay Rs 20mn to residents of Chunnakam, Jaffna, for contaminating groundwater through waste discharges from its thermal power station. This is the highest ever compensation to be awarded in a Fundamental Rights (FR) application in Sri Lanka. Justice Prasanna [...]


SC in landmark judgment applies “Polluter Pays” principle of environmental law

Directs Northern Power Company (Pvt) Ltd to pay Rs 20mn to Chunnakam residents, for groundwater pollution

The Supreme Court (SC) in a landmark judgment has directed Northern Power Company (Pvt) Ltd to pay Rs 20mn to residents of Chunnakam, Jaffna, for contaminating groundwater through waste discharges from its thermal power station. This is the highest ever compensation to be awarded in a Fundamental Rights (FR) application in Sri Lanka.

Justice Prasanna Jayawardena, PC, held that it was appropriate to apply the “Polluter Pays” principle of environmental law to the case. Justices Priyantha Jayawardena, PC, and L T B Dehideniya concurred. The chief occupant of an affected household is now entitled to receive up to a maximum of Rs 40,000 to assist in the cleaning and rehabilitation of wells.

The compensation is aimed at offsetting at least part of the “substantial loss, harm and damage” caused to residents of Chunnakam by groundwater and soil contamination. The payment must be credited within three months to a National Water Supply and Drainage Board-administered account which will be controlled by a representative each of NWSDB, Board of Investment (BOI), the Central Environmental Authority (CEA) and Northern Power.

The panel members and their institutions are collectively and individually responsible for distributing the sum among persons living within a 1.5 kilometre radius of the power station and whose wells have been contaminated with oil and grease and/or BTEX (benzene, toluene, ethylbenzene and xylene). They shall also be collectively and individually responsible for the integrity of that process, Justice Jayawardena ruled.

The mechanism, the judgment said, will enable at least 500 residents of the area to be compensated, at least in part. It is possible the number of residents who have suffered may exceed 500. “Therefore, I direct the panel to ensure that the sum of Rs. 20 million is divided equitably on the basis that the worst affected wells are to be given priority when distributing the payment,” Justice Jayawardena said.

The case  was brought before the SC through an FR application filed by Ravindra Gunawardena Kariyawasam, Chairman of the Centre for Environment and Nature Studies. He complained that Northern Power has run the thermal power station in a manner which polluted the groundwater in the Chunnakam area and made it unfit for human use.

He accused the CEA, Ceylon Electricity Board (CEB), provincial and local authorities, BOI and NWSDB of having failed to enforce the law against Northern Power; of having failed to stop the company from polluting groundwater; and of having failed in their duty to act in the best interests of the public. They are all respondents in the case.

The respondents denied the charges. They said electricity services in the Jaffna peninsula were disrupted during the war and Northern Power had started building its thermal power plant in 2007 while the conflict was still underway. It began operations in 2009 and, as soon as conditions permitted after the end of the war, took measure to ensure the plant did not cause pollution.

From 2010 onwards, Northern Power ran the plant with environmental protection licences (EPLs), the respondents maintained. They also stated the company could not be held solely responsible for groundwater pollution which may have occurred in the past. But the petitioner accused the CEA of having colluded with Northern Power in permitting the power station to run until without an EPL.

Justice Jayawardena draws the “inescapable conclusion” in his judgment that Northern Power had no authority to start operating its thermal power station until the EPL was granted (which happened in May 2010), but had done so from December 2009 onwards. This was in violation of the express prohibition stipulated in law and the CEA had done nothing to prevent this violation.

Further, the validity of this EPL ended in May 2011 but Northern Power only applied for its renewal ten days before its expiry (it should have been done three months prior). The CEA did not take any action in respect of this lapse but referred the company to the BOI saying that the agency should handle the renewal.

The BOI and CEA then carried out a joint inspection of the power plant before the latter gave its concurrence for the EPL renewal. The new environmental licence was issued in September 2011. But there was no suggestion that Northern Power suspended or stopped running its plant in the interim- three months and three weeks without the authority of an EPL. This was also an express violation of the law and the CEA and BOI had done nothing to prevent it.

The company also did not hold an EPL between September 2012 and April 2013 and from April to September 2014. Again, it continued to operate the plant in contravention of the law.

It is clear from reports and documents that, from 2008 onwards and up to about 2012, Northern Power’s thermal plant had been discharging oil contaminated wastewater onto an adjoining land, thereby causing oil contamination of groundwater in a large area of land around the power station complex and also of soil in the vicinity, the judgment states.

During this period, the waste management system, procedures and practices in the power station have also been inadequate. There was a likelihood that leakages of oil from machinery and inadvertent spillages of oil within the power station washed out onto adjoining lands via the drainage system and also permeated into the soil within premises, thereby causing further oil contamination of groundwater and soil in the area.   Nuwan Bopage with Chathura Weththasinghe appeared for the petitioner Mr Kariyawasam; Senior State Counsel Avanti Perera appeared for the CEA, CEB, Attorney General, BOI and NWSDB; K Kanag Isvaran, PC, appeared for the Northern Province Chief Minister; Dinal Phillips appeared for Northern Power; and K V S Ganesharajah appeared for intervenient petitioners.


MTD Walkers not clear how it will find funds to meet payout

Troubled MTD Walkers PLC suffered a fresh blow this week after the Supreme Court ordered its subsidiary, Northern Power Company (Pvt) Ltd, to release Rs 20mn to residents affected by groundwater and soil contamination caused by discharge from its power plant in Chunnakam, Jaffna.

It is not immediately clear how the company will find funds to meet the payout. Its Malaysia stakeholder is yet to sell its 90.8 percent controlling stake in the company to Sri Lanka’s Anunine Holdings. And its share has been suspended from trading since February this year.

To make matters worse, the last Malaysian director of MTD Walkers left the country in December 2018. The management now has to send cheques to Malaysia to be signed but often do not receive a response for ten days, sometimes a fortnight. The company seal is locked up.

The monies can be generated internally to remunerate staff, an authoritative source said. But the lack of response from the Malaysians holds payments up for weeks. “We did not start defaulting on anything till the middle of last year,” the source said. “Now, we are struggling with the Malaysians. They don’t reply to an email or any mode of communication, including phone calls.”

Board resolutions have to be signed,” he continued. “The only person who was here to sign cheques left on December 18. The local management is fighting a huge battle.”



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