Fly-ash has been a cause of environmental pollution, creating health hazards. For disposal, Fly Ash requires large areas of precious land.
On account of the increasing concern for environmental protection and growing awareness of the ill effects of pollution, disposal of ash generated at thermal power plants was considered to be an urgent and challenging task. The first Notification for regulating the use and disposal of fly ash was issued by the Ministry of Environment & Forests, Govt. of India vide Notification bearing No.S.O.763 (E), dated 14th September, 1999 in pursuance of the Order passed by the Hon’ble High Court of Judicature at Delhi dated 25th August, 1999 in C.W.P.No.2145/1999 filed by the Centre for Public Interest Litigation, Delhi v/s Union of India, for ensuring the use of specified quantity of ash. The said Notification lays down the procedure and mechanism for utilization of ash by Thermal Power Plants and it casts an obligation on the Coal or Lignite based Thermal Power Plants for utilization of ash generated in power plants by making it available for at least 10 years from the date of publication of Notification [1] without any payment or any other consideration for the purpose of manufacturing ash-based products such as cement, concrete blocks, bricks, panels or any other material or for the construction of roads, embankments, dams, dykes or for any other construction activity. Further, it also casts an obligation on the Authority(ies) approving and bidding any Projects to consider the use of fly ash in the said construction related activity.
Subsequently, the Notification dated 14.09.1999 was amended by the Notification dated 25.01.2016 which prescribed the mandatory use of Fly/ Pond Ash in Road Construction Projects falling within a radius of 300 km of a Thermal Power Plant. A perusal of the said Notification dated 25.01.2016 of MoEF&CC[2] would show that the cost of transportation of ash for road construction projects or for manufacturing of ash based products or use as soil conditioner in the agriculture activity within a radius of hundred kilometers from the coal or lignite based Thermal Power Plants was stipulated to be completely borne by the coal or lignite based Thermal Power Plant and beyond the distance of hundred kilometers and up to three hundred kilometers, the same was stipulated to be shared equally between the user and the coal or lignite based thermal power plant. However, in the case of road construction Projects which fell under the ambit of Pradhan Mantri Gramin Sadak Yojana and asset creation programmes of the Government involving construction of buildings, roads, dams and embankment, it was made incumbent upon the coal or lignite Thermal Power Plant within a radius of three hundred kilometers of such Projects to bear the entire cost of transportation of ash to the site of such Projects. Such transaction between the Thermal Power Plant and the Contractor would happen in furtherance of a MoU or any other agreement for using the fly ash.
It is imperative to bring out here that the above position was also adopted by Notification dated 27.08.2018 of the MoRT&H which was issued in pursuance of the Notification dated 25.01.2016 of the MoEF&CC. The Notification dated 27.08.2018 clearly shows that (i) it is mandatory to use fly-ash in the construction of road or flyover embankments within a radius of 300 km of a thermal power plant; and (ii) it is mandatory for the coal or lignite based Thermal Power Plant(s) existing within a radius of (300 Km) three hundred kilometers bear the entire cost of transportation of ash to the site of road construction projects under Pradhan Mantri Gramin Sadak Yojana and asset creation programmes of the Government involving construction of buildings, road, dams and embankments.
All the above Notifications have been issued by the MoEF&CC in exercise of the powers conferred by sub-section (1) and clause (v) of sub-section (2) of section 3 of the Environment (Protection) Act, 1986 read with clause (d) of sub-rule (3) of rule (5) of the Environment (Protection) Rules, 1986. Section 3 of the Environment (Protection) Act, 1986 empowers the Central Government to take measures to protect and improve environment.
Therefore, in exercise of this power, the Central Government issues Notifications from time to time setting down mandatory directives stipulating the use of pond/ fly ash and it is clear that these Notifications tantamount to the existing law as on the date of the issuance of such Notifications.
With the above, the position with regard to the use of fly ash was settled that it was mandatory to use fly ash in the construction of road or flyover embankments which would be provided free of cost to the project site(s) and it was also mandatory for the coal or lignite based thermal power plants to bear the entire cost of transportation of the ash to site.
The Construction industry has witnessed a large boom in the past 5 years with major efforts been underway to modernize the country’s road infrastructure. Major projects are being implemented under the Bharatmala Pariyojana wherein asset creation in the form of roads, bridges and flyover is being undertaken on EPC/ HAM modes by the MoRTH/ NHAI. Contractors and Construction Firms have taken note of the position qua the availability of fly ash along with the fact that the IRC:SP 58 also lays down guidelines for the use of fly ash in embankment work/ road work, fly ash became a sought after commodity particularly since the use of natural aggregates would be saved not only saving the finances of the Contractor but also helping the environment to a large extent.
However, the entire position existing qua the use of fly ash changed/ was modified with the issuance of the Notification dated 31.12.2021 which was issued not as an amendment but in fact, in supersession of the earlier Principle Notification dated 14.09.1999 (supra) and the existing obligation with regard to the free supply of fly ash (including the cost of transportation) by the coal or lignite based thermal power plant was changed and it was no more compulsory for the said plant to transport the fly ash generated by it to a project site within 300 kms, provided it could dispose of the same on its own through its own means. It is important to note that while the said Notification dated 31.12.2021 gave flexibility to the thermal power plant, it did not excuse the mandatory provision of use of the fly ash by the construction agencies.
This altered position qua the supply of fly ash took the construction world by storm. It has become difficult to interpret the position laid down in the said Notification and particularly the fate of the Projects which were bidded by various construction agencies wherein the base date (i.e. the date falling 28 days prior to the bid submission date) of such projects falls before the date of the said Notification looms large. It also affects the Projects in which no prior arrangement/ MoU was executed between the Authority bidding out such Projects, the construction agency to whom the same was awarded and the coal/ lignite based thermal power plant. Moreover, it is not understood as to whether now, the construction agency would be liable for not using fly ash or would the scenario change with the altered position particularly when no cost factor has been quoted by the Contractor in such Projects as the Notification was issued much after the bid process was completed.
Though from the mere glance of the position, it appears that the Change in Law clause which is contained in each EPC Agreement may be relied upon by the Contractor to request the Authority for updating the Contract Price (by adding the additional cost of transportation of fly ash from the TPP to the Project site), however, the absence of any prior arrangements in the form of agreements/ MoUs between the Authority bidding out such Projects, the construction agency to whom the same was awarded and the coal/ lignite based thermal power plant acts as a deterrent to tread this path. With regard to seeking a relief under the provision of Change of Scope contained in the Agreements, the position is also still unclear and hazy as the various Authority(ies) have been adopting a mute spectator attitude on the subject. Even in case of EPC/HAM Agreements wherein a prior arrangement in the form of agreements/ MoUs between the Authority bidding out such Projects, the construction agency to whom the same was awarded and the coal/ lignite based thermal power plant is in existence, the fate of the matter (decision as to who shall bear the cost of transportation) shall be decided in due course by the Hon’ble Apex Court before which the matter is pending in the case titled M/s NKC Alewa Pandwa Expressway Private Limited vs. Haryana Power Generation Corporation and others, SLP No. 10599 of 2022.
The question posed in the end is whether this paradigm shift leading to the altered position which has affected the construction industry would be change in law or change of scope is still debatable which is likely to be decided in due course of time either by a clarification by the Ministries involved or by a decision of the Hon’ble Apex Court. However, what remains unchanged is that the use of fly ash is mandatory in the construction of roads, flyovers and embankments and the violation thereof invites environmental compensation and penalty on the defaulting agency.
Authors: Eshjyot Walia
Footnotes
[1] Notification bearing No.S.O.763 (E), dated 14th September, 1999, https://www.mpcb.gov.in/fly-ash/compliance-of-order
[2] Notification bearing No. S.O.254€, dated 25th January, 2016