States are protesting against the land acquisition law put in place by the previous government; the president, in his recent speech, talked about a national land use policy; many voices from the NDA government have already called for a simplification of the law and for ease of implementation; industry is demanding it.
M Rajshekhar unravels why this is such a vexing problem There's hope the current dispensation will improve the land acquisition law's implementation -to make it easier for industry while being considerate to the needs of the land owner Land acquisition has become gnarled and twisted for India Inc and the mining sector, compunded by a climate of mistrust and forced choices
O n May 8, Thiess India was hit by two thunderbolts. Its chairman and managing director, Raman Srikanth, was arrested on charges of cheating and criminal breach of trust, charges the company denies. The same day, the Indian subsidiary of $24.4-billion Australian infrastructure, mining and real estate firm Leighton Holdings received a letter from NTPC terminating the contract between them.
Despite several extensions, the notice said, Thiess had failed “to make any headway“ in extracting coal from Pakri Barwadih, a coal block in Jharkhand.At one level, the notice was the latest broadside in an increasingly acrimonious dynamic between the two companies. At another level, it was the latest act in a cautionary tale of how gnarled and twisted land acquisition has become for India Inc in general and the mining sector in particular.
It goes beyond the law and into the practical endeavours of this exercise. It goes beyond the traditional reasons cited, of villagers' demands for better compensation and jobs, and into the complex, transactional construct of land acquisition, and the climate of mistrust and forced choices it fosters.
The flashpoints keep increasing. The Reliance SEZ in Raigad. Coal India in Korba, Chhattisgarh. Tata Motors in Singur, West Bengal. The abortive hydel power boom of Arunachal. The previous land acquisition law gave the government sweeping powers to acquire land -at low rates and by ignoring local concerns by citing public interest.
This resulted in an inevitable blowback from communities.
In 2013, the previous Congress-led government introduced a new law. Among other things, to mollify local communities, it asked private companies to obtain consent of 80% of project-affected families. “This new Act has swung to the other extreme,“ says Gaurav Jain, a real estate professional who worked with Emaar and DLF before setting up his own consultancy, Samyak Properties & Infrastructure. Little land acquisition has happened under the new law, partly because of the economic slowdown and partly because of the law itself.
Change might be coming. A stated intent of the new Bharatiya Janata Party-led government at the Centre is to get the wheels of industry moving. “Till now, industry was saying the Act needs a relook. But now, even the new government is saying the Act has made land acquisition difficult and expensive,“ says Jain. “It will undergo changes.
There is no way out.“
A department under commerce and industry minister Nirmala Sitharaman plans to make a submission to the rural development ministry -which is in charge of the land acquisition legislation -to do away with the `social impact assessment' before land acquisition, which entails gauging a project's impact on local livelihoods, sources of drinking water, grazing lands, places of worship, etc.
Earlier this week, state governments joined the chorus against the new land acquisition law, saying its provisions will adversely impact infrastructure projects and the overall investment climate in the country. “With this land acquisition bill“, says Vishal Dev, industry secretary, Orissa, “We can just forget about attracting industry.“
“If land acquisition took four to five years under the old act,“ Dev told ET on the phone, “it will take 1.8-2 times as long with the new one.“ That is because, he says, the new bill wants more notices to be given out, more studies to be commissioned and stipulates long periods for communities to respond to these notices.
In its initial remarks after taking over, it appeared that the NDA would retain the new law, but work on improving its implementation -to make it easier for industry while being considerate to the needs of the land owner.
It's a balance that was, even after 10 years, never achieved at Pakri Barwadih.
`Pakki Barbadi' With geological reserves of 1.6 billion tonnes, Pakri Barwadih is the largest coal block given out by the Government of India for captive use till date. In all, since 1993, the government has given out 195 blocks, 155 of them between 2004 and 2011. Of this, very few have got going. Most have been held up in processes or clearances, land acquisition being one of the issues.
Pakri Barwadih was allotted to NTPC in 2004 at a time when the company wanted to meet 20% of its coal requirements through its own blocks. “The company's then-CMD told us it was a goldmine for NTPC. We could use it to meet our coal requirements,“ recalls a former senior employee in NTPC, not wanting to be named. “Employees now call it pakki barbadi (definite ruin).“
Located about 23 km to the south of Hazaribagh, BJP leader Yashwant Sinha's erstwhile constituency, this is a poor part of the country. Most of the 2,000-odd households living over the block eke out one crop from their fields during the rains and work as labour in Hazaribagh or elsewhere the rest of the year. NTPC, and 26 other companies who were allotted blocks in the Karanpara coalfield, had to acquire land and start mining. So far, NTPC has not been able to and once almost saw the block deallocated.
NTPC blames Thiess. “Mining in India entails passionate involvement in local conditions and managing the environment,“ NTPC chairman and managing director, Arup Roy Choudhury, told ET. “None of these initiatives could be seen in the local representatives of Thiess. Hence, no work could actually happen at the site.“
A senior Thiess India official told ET, on condition of anonymity, the arrangement was that NTPC would acquire the land and Thiess would develop the mine and carry out operations thereafter. NTPC, he adds, neither made land nor basic infrastructure available. NTPC declined comment on specifics. “Since it is a contractual matter, it will not be appropriate to comment now,“ an NTPC spokesperson said. A legal battle seems likely.
Land Rights The reason Pakri Barwadih could not be operationalised lies in the messiness of land acquisition. As with most projects, the 6,600odd acres that NTPC needed to acquire had diverse owners. Based on the legal statute of their holding, these can be classified under four heads: revenue land owned by farmers, forest and deemed-forest land owned by the forest department, and government land.
Acquisition ran into trouble in each.
People are living and farming in the lands shown as belonging to the government and the forest department. “With land acquisition running into delays, we were told to start work in the forest area NTPC had obtained,“ says the Thiess manager. “After a survey of about 1,200 acres, we found people were cultivating 206 acres.“
Weak laws and social patterns collide here. Many of these people have been farming here for several generations. They see the land as theirs in spirit, but the law does not confer legal status on all. “For sarkari land, the `adverse possession' rule and several court orders say that anyone who has lived on government land for more than 30 years should be paid compensation as per government rules,“ says Sunil Kumar, collector of Hazaribagh. But there's no policy for those who have lived in these places for less than 30 years.
The Forest Rights Act (FRA), passed in 2006, conferred legal status on forest dwellers, but it has been poorly implemented.
“Some villagers had applied under the FRA, but we never heard back after submitting our forms,“ says Jitendra Bhogata, who lives in Iti Sirma, a tribal village in the Pakri Barwadih block.
Titles are not a problem in revenue land, which accounts for 4,071 acres of the block's 6,600-odd acres. But NTPC, says the Thiess official, has acquired only 10%-15%. In this place where people are poor, have small landholdings and no alternative sustainable livelihoods, NTPC is willing to pay `15 lakh an acre, twice the going rate. In addition, it is offering an annuity of about `3,000 every month for 35 years, but not jobs.
Villagers are unhappy with the compensation terms. “We cannot buy land in the vicinity. The whole valley is going into coal blocks,“ says Satyajit Singh, a tempo driver from nearby Pandeypara village. “We will have to look for land in areas new to us. Also, can we search for new land, buy it, build a house, etc, in that `15 lakh?“ Villagers like him have calculated the quantum of coal lying below each acre by dividing the size of the coal reserves by the block's acreage. Says Singh, “Agar koyla ka ek tonne `2,000 ka hai to ek acre ki kimat kitni honi chahiye? Hame to uska adha per cent bhi nahin mil raha hai (If a tonne of coal costs `2,000, what would an acre of land cost? We're not even earning half a per cent of that)“.
As tempers have flared, the site has seen police firing. People have died. The company continues to acquire land. But that is due to the imposition of Section 9, which prohibits locals from selling land to anyone but the company.
The land acquisition in Pakri Barwadih was under the Coal Bearing Area Act of 1957, which makes fewer demands on a project proponent than the new Land Acquisition Act. “The Coal Bearing Area Act assumes there is a public interest since the government is acquiring land,“ says Raipur-based lawyer Sudha Bhardwaj. “There is lesser burden on the project proponent to prove the project is in public interest.“In contrast, the new land acquisition act mandates prior consent from at least 80% of affected families (and 70% consent in the case of PPP projects).
Rural development minister Gopinath Munde was favour of these percentages and the compensation terms in the new law. It now remains to be seen what the next rural development minister thinks.
`Managing' The Environment Another reason for NTPC's slow progress on revenue lands is a local Congress MLA, Yogendra Sao. The Karanpara coalfield stretches across most of his assembly constituency. Needing to walk a tightrope between industry and locals, Sao has been speaking mostly about good compensation. In early 2011, when NTPC was offering `10 lakh per acre, he sat on a dharna, asking for more. In 2013, two months after NTPC agreed to pay `15 lakh and a higher annuity, he hiked his demand to `40 lakh. “NTPC is now in a dilemma,“ says the Theiss manager. “What if it agrees and he hikes the number again?“ According to an NTPC official, NTPC got then power minister Jyotiraditya Scindia to speak to Sao. But even that did not help. The local administration has not acted against Sao, who has been a minister in the state government. Repeated attempts by ET to contact Sao failed.
Meanwhile, a set of new actors have entered the equation. Small political parties like the All Jharkhand Student Union and Jharkhand Vikas Morcha are getting active in this area. As are the Naxals and two local militias, the Tritiya Prastuti Committee and the Jharkhand Prastuti Committee, all of which are extorting money.
This is also the case in, for example, Arunachal Pradesh, where a boom in hydel power resulted in local political leaders brokering land acquisition deals, and student unions extorting money from project proponents.
Economic Costs The Theiss official estimates that, by not operationalising the block, NTPC is spending `7,000 crore importing coal from Australia -10 million tonnes of relatively better coal at `7,000 a tonne. In contrast, he says, coal from Pakri Barwadih would cost just `3,000 crore -15 millions tonnes at `2,000 each.
According to him, the company could easily resolve the issue by giving jobs to the projectaffected families. “At `15,000 a month, or `1.8 lakh per household per year, that would work out to `36 crore a year,“ he says. As it is, the cost is passed on to the customer.“
But NTPC does not have any policy on providing employment. “Hence, the numbers which are being talked about are only hypothetical and cannot be commented upon,“ says the NTPC spokesperson.
Outsourcing Model Given all this, NTPC terminated the Theiss contract. It now plans to re-tender Pakri Barwadih and appoint another private company as the new mining development organisation (MDO). “We hope the new MDOs would be more grounded in these geographies and get the coal extracted,“ says Choudhury of NTPC.
NTPC has already issued one such tender, for a mine called Kerandari, which abuts Pakri Barwadih. A manager in NTPC's fuel security team, who did not want to be named, says the MDO will be responsible not just for extracting coal, but also for all clearances and land acquisition -an outsourcing model. NTPC will only make the payments. In other words, while NTPC continues to have legal possession over the land, the onus for ensuring physical possession moves to the MDO.
Even Coal India, the country's public sector producer of coal, is gravitating towards the outsourcing model. “In one project, Rajmahal, with a production capacity of 30 million tonnes, we have included R&R (rehabilitation and resettlement) in the tender,“ says Narsingh Rao, its former CMD.
“In future projects, we want to move R&R, forest clearance and land acquisition to private companies.“
Vinayak Chatterjee, CMD of infrastructure consultancy Feedback Infra, sees this as a failure of the state. “What you are describing to me is something that I am seeing over and over again,“ he says. “The state is shrugging off its responsibilities and outsourcing its core functions to the private sector.“
As such, the Pakri Barwadih issue also touches on one common f law of most PPPs in the coal sector. Says Kameswara R ao, leader ( power a nd mi ni ng), PricewaterhouseCoopers, “They push all the risk onto the private company even as the gains stay fixed.“
Others are more hopeful. According to Gaurav Jain, the NTPC and Coal India idea might work as companies are struggling to obtain 80% consent, and such an arrangement creates a via media. A private company can acquire land through private land aggregators, who can then sell it to the contractor.
But similar models in Chhattisgarh for mining and power projects resulted in suboptimal outcomes. Land aggregators bought land from farmers at far lower rates than what they eventually got from the company.
The farmers, since they had not sold directly to the company, were not treated as projectaffected people.
There is also the possibility of human rights violations. The NTPC tender comes with penalties for delays. Also, says the spokesperson: “The MDO has to ensure, at all the times, physical possession of land required for next five years.“ Thus, there is a risk the private contractor, if close to local elite, could simply force the villagers off their land.
m.rajshekhar@timesgroup.com