PMO land transfer move to aid PPP projects: Feedback Infra

In a move to propel reforms, the Prime Minister’s Office (PMO) approved to ease the process of using government owned land for infrastructure projects. All land transfer from ministries to PSUs has also been allowed.

Analysing the impact of this move,Vinayak Chatterjee, Chairman of Feedback Infrastructure said the relaxation of the land transfer rules is expected to aid PPP projects. He added that the notification is likely to impact projects requiring central government land. He mentioned that 60-75% infrastructure projects require government land. This would also facilitate private projects to get central government land without the nod from the cabinet. “If a private power plant gets a sanction to set up its facility and the land in any location in India happens to be land owned by the central government then the permission need not go to the cabinet. To that extent, it helps the private sector. In the old situation, it would have again gone to the cabinet. First, it would have gone for a project clearance then it would have again gone to cabinet for a land clearance but it is only for central government owned land. So to that extent, there is also limitation in its scope,” he explained. Furthermore, Coal India agreeing to 80% coal supply is a significant positive move, Chatterjee stated. “I think that is a significant move forward and full marks to the PMO for persistently pushing the agenda with Coal India. So my take is that a large portion of the policy framework now for solving the fuel crisis has been taken. Now we are moving to the implementation phase,” he added. Below is an edited transcript of his interview with Udayan Mukherjee and Sonia Shenoy. Q: Could you explain the materiality of this move. What percentage of projects roughly would be required to use central government land, and what kind of opening up then can we expect in such projects? A: My rough guess is that anywhere upto 60-75% of projects in the infrastructure area, in some manner, require central government land. For example, the biggest is railways. Even in the last railway budget speech that Mr Dinesh Trivedi gave and the railway modernization plan and a twelfth plan documents, a substantive portion of railway finance improvement is supposed to come from unlocking value embedded in vast tracks of railway land including station development and various PPP projects. After a port is built, the crucial economic hinterland is the land area surrounding the ports where you need container terminals, liquid fuel terminals, freight stations, loading-unloading bays and many of them are now being developed by PPP mode. So it need not necessarily be PPP. For example, the port authority can give land to Concor, which is again an arm of the Indian government to railways for storage of food grains. For example, government land can be given to container, the central warehousing corporation to build warehouses for grain storage. So across the spectrum, whether it is sometimes defense land that needs to be alienated to extend the runways or airports or other issues or railways or ports or even wasteland lying with the central government under the national wasteland authority to set up a power plant. To converge, it opens up administratively, a huge degree of easing of the situation, in terms of this notification that came yesterday. _PAGEBREAK_ Q: The infrastructure operators that we spoke to suggest that while it is an incrementally positive step, there are many other parcels of land which are not directly owned by the central government where they could get stuck with clearances. In that case, this becomes a necessary but not a sufficient condition for speedier project implementation, would you concur with that view? A: I agree with you. Remember, we are looking at many wheel spinning differently. This is to do with alienation of land owned by the central government because the central government also does not have jurisdiction over state government land. So, this notification only impacts those projects where one arm of the government is transferring to another arm of the government of centrally owned land or one arm of the government is transferring to a PPP project where private sector is involved, and it has received the clearance of the Public Private Partnership Appraisal Committee (PPAC). It has its own agenda whereas if other land needs to be acquired that is now covered under the land acquisition bill, which is hitting cabinet this week, and hopefully, the monsoon session of parliament thereafter. The land acquisition bill will then cover the rest of the areas where land needs to be acquired. For infrastructure, those which have been designated eminent domain status along with defense large provisions of the land acquisition bill don’t impact because under eminent domain, you can follow the old rules of notifying and acquiring without having to take permission from 80% of the farmers etc. So there are two of these wheels moving independently. But the notification that came out yesterday certainly is a huge step forward because honestly, most of the new PPP projects in ports, railways etc will be done one way or the other on lands owned by central government. Q: What about private infrastructure projects including power and many of the other industrial projects, how much would this help such projects, which are not railway or port linked? A: If a private power plant gets a sanction to set up its facility and the land in any location in India happens to be land owned by the central government then the permission need not go to the cabinet. To that extent, it helps the private sector. In the old situation, it would have again gone to the cabinet. First, it would have gone for a project clearance then it would have again gone to cabinet for a land clearance but it is only for central government owned land. So to that extent, there is also limitation in its scope. Q: Do you sense any greater urgency in the power situation given the events of the last few days, which has got a lot of international or negative international press? Will there be any moves to expedite the situation with the power sector in terms of either coal availability or any of the things which the government has been trying to address? A: Day before yesterday was the historic coal board meeting where finally the board agreed to something that the PMO has been saying from January onwards. They finally came around saying yes yesterday. They agreed to 80% coal supply, 15% import, they agreed to pull pricing but the only thing they held back were certain aspects of the penalty clause, which they will revert back. The PMO started this process in January and had committed by March, Coal India kept dragging its feet and its board and its 1% shareholder children’s trust etc; but finally, they have agreed to these conditions. I think that is a significant move forward and full marks to the PMO for persistently pushing the agenda with Coal India. So my take is that a large portion of the policy framework now for solving the fuel crisis has been taken. Now we are moving to the implementation phase.