Shishir AsthanaMoneycontrol Research
Countries across the globe are competing against each other to attract investments. The Indian government too is working towards ‘Ease of doing business in India’ by cutting down on red tape and providing incentives in order to attract investments and create employment.
Indian states are also competing among themselves to attract investments. But in some states, vested interests of political parties are queering the pitch for investors.
The most famous politically sponsored unrest was that of Tata Motors in Singur where Mamata Banerjee, the current chief minister of West Bengal, forced the company to shift its plant to Gujarat. She managed to win the next state elections and become the chief minister of the state. Since then, the state has not seen any major projects being commissioned despite her tall promises.
Posco, the South Korean mining and metal company, has been fighting a long battle in Orissa, where a group of political parties, backed by religious groups, prevented the company from setting up a metal refinery. Konkan Railway also faced similar protest in Goa when it was being set up.
Among the recent projects that have face the wrath of politically and religiously backed groups are the Nuclear Power unit and Sterlite projects, both in the vicinity of Tuticorin in Tamil Nadu. Now, a new project is expected to join this unlucky group of stuck projects.
Recently, the Maharashtra government had announced investment to the tune of Rs 3 lakh crore ($44 billion) in the single largest refinery in which Indian Oil Corporation and Saudi Aramco were the stakeholders. The project would have made any country, let alone a state in India, proud. It would have also resulted in huge employment generation and benefits for a number of small and medium enterprises.
The project, which was expected to be set up in Nanar, Ratnagiri, would have had access to oil from Aramco’s oil wells in Saudi Arabia and the output from 60 million tonnes was to be sold in the country as well as exported.
But controversy struck even before the ink on the deal document could dry. Shiv Sena chief Uddhav Thackeray attacked the BJP with whom it shares power in Maharashtra over the upcoming Nanar oil refinery.
The project has already seen several protests against land acquisition. Opposition parties are sensing an opportunity to embarrass the government and have ganged up against the project.
Allegations were made that the land for the project has been acquired by investors even before the deal was announced. "Shiv Sena will not allow the land to be acquired for the project. We won't allow the government to acquire even an inch of land," Uddhav Thackeray told supporters at a rally in Ratnagiri.
Maharashtra's Industries Minister Subhash Desai, who represents Shiv Sena in the coalition state government, said the project will not see the light of the day under any circumstances.
Maharashtra’s Chief Minister Devendra Fadnavis snubbed his minister and said that it is his personal opinion and not the decision of the government.
The Congress party in its ‘fact-finding report’ has said that the refinery would affect 15 villages in Rajapur taluka and two villages in Devgad taluka. Along with human displacement across 15,000 hectares, 13 lakh alphonso mango trees, seven lakh cashew trees as well as eight crore trees in the jungles will also have to be cut.
Reports also said that the residents too are unhappy with the project and are planning agitations.
There are primarily three issues that are making the project controversial. The first is the allegation by Shiv Sena that the details of the project were leaked and land has been ‘grabbed’ by investors from Mumbai. This is not the first time that such allegations are being made.
Land acquisition in India has become a big bane for any project, be it setting up industries or creating infrastructure for road or Railways. These agitations are generally used by the local politician and population to increase the price of land.
The 9,900 MW Jaitapur Nuclear Power Project in India too had faced similar agitations. Jaitapur, also in Ratnagiri, was the hotbed of agitation by various groups, but when the price for the land acquisition was increased by the government most of these agitations died down.
In the case of Nanar oil refinery, the problem seems to be that most of the land has already been acquired by investors, who will be benefitting from the purchase by the government. There will be little money for the locals and the local politician to extract.
If details of the project were leaked to these investors, then it is a problem and the grouse of the residents to some extent is valid. But in any case, they were willing sellers, with or without the project. If the same logic can be extended to any project, then all land acquisitions would end up in litigation.
The second is an environment issue which the political parties are trying to raise. Some of the parties were the same ones who cleared many factories in the area, including the controversial Dabhol Power project (read Enron Power).
These days, most chemical plants and refineries work on the principle of zero pollution. All kind of effluents is either treated and reused or allowed to dispose off only after strict checks.
Finally, there is the point of the local agriculture business being destroyed. The area in which Nanar oil refinery is expected to come up is famous for Alphonso mangoes and cashews. This is the only valid reason that can prevent the refinery from being set up.
Most locals in the area live a comfortable life by living off their Alphonso plantation. These plantations do not require too much maintenance but at the same time give a handsome earning for the farmers. Depriving them of this comfortable lifestyle with a promise of giving them jobs in the refinery might not interest most of the locals.
Unfortunately, there are many places in India where the locals do not want to be seen working in their home state but would not mind working as janitors abroad. Most of these places are where the locals have traditionally earned by watching their crop grow. Only after a few generations, does it dawn upon them that farm income is not enough to support the entire family. But by then, there are hardly any respectable jobs available.
Fortunately, the Maharashtra government has a good opportunity of setting up the refinery in interior Vidharbha, which has seen a number of farmer deaths. Though it will be a landlocked refinery, it will be near the centre of the country and logistically good to sell its products. Further, low-cost oil from Saudi Arabia will still make the project feasible. Landlocked refineries in India like Panipat and Bina in Madhya Pradesh are working without any hiccups.
There will be no face loss for the Chief Minister if he plays his cards right and moves the project to central India. The project remains in the state and the opposition parties will have to answer future generations for unemployment.
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