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Mohan Padmanabhan

KOLKATA, July 24

INDIAN Infrastructure Equipment Ltd (IIEL), a member of the Srei International Finance Group, has set up an independent Environment Advisory Board (EAB) to advice the company on environmental aspects prior to funding of infrastructure equipment, mainly in the construction sector.

IIEL, launched by the Srei group last August, has set up the country's first equipment bank titled "QUIPO", to create within the country an "accessible pool of world-class equipment".

Talking to Business Line here, Mr Sunil Kanoria, Managing Director of IIEL, said the Delhi-based EAB would act as a review body for equipment financing contracts associated with environmental or social concerns, and would be advising the Technical and Environmental Evaluation Department, and the rental evaluation and approval committees of the company on whether such contracts should be taken up or not. He particularly cited projects, which have generated media, political or NGO controversy, where the advice of EAB would be sought.

Asked on the powers being vested in the EAB, he said while it cannot force the IIEL management to terminate a contract, it could certainly make a recommendation to that effect. Any contract which the EAB suggests should be terminated on environmental, social or reputation risk grounds, will have to be reported in the minutes of the quarterly meetings EAB will have with the IIEL board, Mr Kanoria pointed out.

Describing the move as part of an exercise to initiate best business practices, as applied globally, in IIEL, he said the objective was to eliminate the environmental risks. Equipment financing on a large-scale of an environmentally suspect project may lead to the company's funds getting blocked, he pointed out.

According to him, the EAB, already operationalised, would also identify for the benefit of the IIEL management infrastructure projects with "significant environmental and social benefits and encourage its participation". On the structure of EAB, Mr Kanoria said it comprised entirely persons not in the direct employ of IIEL, thus allowing it to be totally independent of the company's business process. Among the members are representatives of NGOs, academics/researchers from universities or similar institutes, environmental consultants and experts (those who have worked as regulators, or attached to industry or trade associations). The International Finance Corporation (IFC), which has a 20 per cent stake in IIEL, has made major contributions towards formation of the EAB. The Srei group holds the controlling 52 per cent.

The equipment bank, according to Mr Kanoria, acquires, stores, maintains and rents the entire range of infrastructure equipment, helps users to bring down the costs of direct purchase, and also minimises operating and recurring expenditure on maintenance.

He said "QUIPO" was an extension of the group's core business of infrastructure financing.

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