Hydro is a Fortune 500 energy and aluminium supplier operating in ...

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The Hydro experience in Utkal, India
During the 1990s, Hydro Aluminium was engaged
in developing a bauxite and alumina project
in Orissa in India. Hydro owned one third of the
company set up for the project, with two major
Indian industrial companies, Indal and Tata, as
equal partners. The project site was in a remote
area with a mixed population, predominantly
low caste Hindus and indigenous Khonds.
When Hydro entered the project in 1992,
India had just changed its economic policy
to allow foreign participation in joint ventures.
Indian authorities, both at federal and local
(state) level, thus encouraged foreign investment
in extractive industries. In line with official Indian
assimilation policy, little or no attention was
paid to indigenous groups that were living on
or close to areas with mineral resources.
However, both national and international
NGOs were increasingly directing their focus
to the rights and needs of these groups.
Hydro’s knowledge of Indian business culture
was limited, and so was the exposure of Indian
industrial companies to foreign norms and standards,
especially with regard to environmental
and social issues. Acknowledging that it was
playing on foreign turf, Hydro chose a strategy
where most local issues were left for the Indian
Joint venture partners to deal with.
There were many reasons why the project
made little progress during the 90s: conflicting
interests between national and local politics;
a bureaucracy unfamiliar with the requirements
of international industrial companies; a crosssection
of NGOs with various agendas, but with
the common denominator that they all purported
to be the sole protector of the interests of the
indigenous people, and thus made it difficult
for the project management to establish direct
communication with those affected by the
project. However, it must also be admitted that
the industrial partners had not given sufficient
attention to the important social issues that were
related to the project. Hydro withdrew from the
project inn 2002.
The Utkal project was extremely complex and
represents, therefore, a variety of the challenges
that companies must take into consideration when
they enter foreign and, as in this case, virgin
territory. At the outset, Hydro had little knowledge
of Indian political and business culture, or of the
issues pertaining to the indigenous population
at the site and their position in Indian society.
A better understanding would certainly have helped,
and was also gradually accumulated during
the course of the project. Hydro probably ended
up with as much knowledge of site conditions
and the indigenous Khonds as its Indian business
partners and most of the international
NGOs.
However, what is obvious in hindsight is that
we lacked the required systematic and thorough
approach, where all relevant issues are identified,
analysed and prepared for.