Environmental damage by Mundra project can cost the Adani Group very heavily as an environment ministry panel has found the project in violation of green norms and recommended a hefty penalty of Rs 200 crore.

The panel, headed by Centre for Science & Environment Director General Sunita Narain, found that the Adani Group's Mundra waterfront power project in Gujarat damaged environment by destroying mangroves and blocked creeks, and breached environmental clearance norms as well as green regulations.

The company was found responsible for the destruction of 75 hectares of mangroves in Bocha Island. Under the environmental clearance terms & conditions, this area was declared as a conservation zone.

In addition, the company failed to take measures to make sure that the channels that bring seawater into the power plant were lined, which was necessary to prevent salinity contamination of groundwater.

The five-member panel also pointed out, "The public hearing procedure, which is a critical part of project clearance and helps to understand and mitigate the concerns of local people, has also been bypassed on one pretext or another."

The panel recommended a penalty of Rs 200 crore or 1 per cent of Mundra project's total investment, whichever is higher, to be collected from the company towards Environment Restoration Fund.

The report has already been submitted to environment minister Jayanthi Natarajan.