Rajasthan is planning to amend land acquisition laws in the state. This is in line with the Centre's idea to allow state governments to have the provision of a consent clause and social impact assessment while implementing the state law.
Amendments to Rajasthan land acquisition are with state legislature, says state chief secretary CS Rajan. The Proposed Land Act Amendments have been vetted by a select panel of assembly, he says. Concerns on the Land Act were dealt with by central ordinance in favour of delegated provisions for states on land acquisition, he adds. The state has addressed social impact (SIA) and consent clause problems in the state amendments.
Rajan says SIA and consent clause are not needed for linear and PPP projects. He says it is up to Rajasthan assembly to carry out amendments to its Land Act.
The state is planning to prepare 10,000 acres of land bank by October. Rajasthan has already acquired 6,000 acres. It is expecting Rs 2 lakh crore investments in the solar sector. Currently 37,000 MW worth of applications on solar are on hold.
Rajan has also spoken to petroleum minister Dharmendra Pradhan on extending production sharing contract (PSC) with Cairn. He expects Cairn production sharing contract to be extended anytime now. Cairn has stopped incremental investments as the PSC was not being extended. He is talking to Cairn on getting gas from Barmer.
Rajan also plans to set up a gas grid in Rajasthan and privatise power distribution and generation assets by privatising power. He also plans to offload future liabilities on its balancesheet. He has also identified cities for power distribution franchise model and will open bids for power distribution franchise by August-end. He also plans to privatise Barmer lignite-based plant having 2X125 MW capacity.
He also plans to divest stake in Rajasthan generation company. Rajan is also in talks with NTPC to divest stake in Rajasthan Generation Company - Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RVUNL). He has already engaged consultants for divesting stake in RVUNL.
Rajasthan has increased power tariffs this year and is expecting Rs 4,500-crore revenue. Rajan plans to meet the power minister on Monday and plead to extend the financial restructuring programme (FRP) period.
He feels the three-year FRP period was too less. Currently, Rajasthan State Electricity Board (SEB) is surviving on Rs 8,000 crore loan by Power Finance Corporation (PFC) and Rural Electrification Corporation (REC).Below is the transcript of CS Rajan’s interview with Rituparna Bhuyan on CNBC-TV18.Q: Let me start by asking you about one of the basic ingredients relate to investments and that is regarding land. The process regarding a central land registration that is in a limbo, but the new idea that has now been floated is that states and go ahead and carry forward their own changes related to the land act. Will Rajasthan carry out changes to its land acquisition act?A: Just to update you, Rajasthan was the first state which had suggested on the lines of the amendments that were carried out to various labour legislations, we had also proposed amendments in the Land Acquisition Act of the centre and the state cabinet had cleared those amendments. It had gone to the state assembly and the state assembly then referred it to the select committee, and the select committee has concluded its deliberations. The recommendations of the select committee are now before the state legislature. But in the meantime, many of the concerns that we had raised and many of the amendments that we had proposed, have now been addressed by the Central Government in the ordinance that was brought out subsequently. And in the most recent meeting of the National Institution for Transforming India (NITI) Aayog, chaired by the Prime Minister, we had said that either the Central Government passes this legislation quickly and if for any reason a consensus does not emerge, then at least enablie provisions be made in the Central legislation to let states undertake any reforms at their level. So, we are entirely in favour of any delegated reform provisions in the Central legislation.Q: Can you give us a perspective about the two most controversial and I would say, in terms of investments, one of the bottle-necks as the industry has been talking about them and that is regarding social impacts study as well as the consent clause. Do you think Rajasthan, whatever land amendments that you will be carrying out, you will be addressing those issues? Will Social Impact Assessment (SIA) and Consent Clause be part of the Rajasthan law as well?A: The state amendments that we had proposed had addressed both these clauses. So, therefore, we obviously are seeking greater powers at the state level to be handled this on sectoral basis. For example, if they are public infrastructure linear projects like road or railways, etc. we need not go through this process of Social Impact Assessment. And therefore, we can meet all the requirements of compensation. We can even think in terms of increasing the compensation, even beyond what may be proposed in the central act.But perhaps, we would be delaying projects if we go through it on a mechanical manner that any and every type of project should necessarily go through a social impact assessment process. Q: Can you give us some clarity on the process now? I mean, because there is a central act and there is a central ordinance and measure are being taken to take forward the central act and the central ordinance. But, at the state level, can you carry out those changes and then again get a consensus from the President, is that a way out also?A: This is what I precisely explained. That was what we had attempted and I told you that as part of that attempt, the processes that we have to first take it the State Government has to go through the state legislature before it takes it to the Central Government for securing presidential assent. But we were at the stage where we were in the State Legislature. At that point of time, the Central Government brought in an ordinance which addressed the concerns that we had raised through the state bill. Now that those concerns have been addressed, perhaps, of course this is now in the domain of the State Legislature, but perhaps, the state amendments that we were proposing may now no longer be required. More so is that the Central Government were to make enabling provisions in the Central Legislation.Q: But, if it does not come - if the Central come and says that, then Rajasthan can go ahead..A: We can because that is currently with the state legislature. Then, we can take it forward for securing presidential assent. Q: Also if you can give us an idea about the kind of land that Rico has in your Land Bank.A: Rico is the industrial catalyst and it has about 325 industrial estates across the states. These states are of all kinds. They are multi sectoral; some are only for covering the needs for one particular sector and there are some for covering the needs of one particular sector. Then there is a unique one - in Neemrana - the first country specific economic zone.Q: I will come to that because Japanese and the South Koreans are interested in that industrial zone. A: For resurge in Rajasthan, we are targeting a 10,000 acre Land Bank. That is basically across a state, government lands - wherever they are available, those lands and plus acquisition, speedy acquisition of other lands. We have now already secured almost 6,000 acres of land across the state for the Land Bank and I think we should be able to meet our target of 10,000 acres by November. So, we will have a large Land Bank at our disposal to be able to meet the requirements of industry and any part of the state. Q: Rajasthan was perhaps the first state to launch labour reforms, which inspired the Central Government to carry forward reforms in that sector. But, the feedback from surveys carried out by industry bodies is that while you carried out those reforms - up to 70 percent of the industry within the state may not have been aware of those reform measures in the labour related issues. Can you give us a sense of what has happened after those reforms were carried out? And how has the industry adopted to those labour reforms?A: Actually there has been a huge spurt in the investments over the last one year. But it would be unfair to attribute this huge spurt only to labour reforms. It is very difficult to establish a clear relationship between reform and investments. I believe that the extensive labour reforms that have been carried out have been a major contributor in the spurt in investments that we have seen in the past 7-8 months. If this tempo is maintained, if this momentum is maintained, we should secure the levels of investment which are unprecedented at least in the context of Rajasthan.Q: What is the kind of investments that are in the pipeline as far as Rajasthan is concerned?A: The investments have come across a number of sectors. In terms of automotives, Rajasthan is now emerging in North India as a major hub. We have Honda four wheeler and two wheelers, we have Hero, we have JCB now, and we have tractor groups and the auto component manufacturers. This is because most of the manufacturing activity in north India is centered in the national capital region (NCR), in Gurgaon and Noida, etc. Therefore because of our proximity to the NCR, districts of Alwar and Bharatpur are actually form part of the NCR region and the city of Jaipur and Kota are counter magnet cities. These areas, because of proximity to Delhi, are also falling on the Delhi - Mumbai Industrial Corridor (DMIC). Therefore, there has been a huge interest in the industrial areas that we are developing and they are getting saturated in no time. There is more and more demand for land for setting up of industry in the automotive, in Electronic System Design & Manufacturing (ESDM), in textiles, in ceramics, etc. We have developed two more economic zones - one for the Japanese and one for the Koreans both in an area call Ghilot which is near Neemrana. Both have been opened and we have already signed the first memorandum of understandings (MoU) for both the zones with some Japanese and Korean investors.Q: How much investment do you expect in those new?A: They have just been opened, so I think these are early days. I would not be able to put a figure on it as of now._PAGEBREAK_
Q: Foxcon’s top management was here looking around in several states to set up facilities. They want to have around 10 facilities in India. Of course, solar is one area which they are interested in. Have you been talking to Foxconn? A: We have been talking to SB Clean Energy. The company is a joint venture, which has been floated by Softbank, by Foxconn and Bharti Airtel.
These three together have formed a new company in India called SB Clean Energy and that company, in fact, Softbank has promised an investment of USD 20 billion in India and the chairman of Softbank, Mr Masayoshi Son was in India recently. The two states that he visited apart from his visit and appointments in Delhi with the Prime Minister and other big-wigs, he visited Andhra Pradesh and Telangana and he visited Rajasthan where he has promised an investment. It is the largest investment in solar generation anywhere in the world. He would be making it in Rajasthan. Q: If you can give us a ball-park figure - above USD two billion, above USD four billion? A: I would not want to because the MoU has not yet been inked. The MoU draft has been exchanged between us. So, till the MoU is finalised, I would not want to put a figure on it. Q: So, when will you sign the MoU? A: We are expecting to sign it anytime now maybe within this month. Q: Let us talk about the energy sector because we were talking about solar. You already have a good presence in the energy sector. Cairn has been one of the big-ticket investments in Rajasthan and we understand that the lease that you have with Cairn expires by 2020. So, will you be extending that lease? A: That is a production contract. That production sharing contract we have, our Chief Minister met the Union Petroleum Minister, I met the secretary of Petroleum, and we are lending our weight behind getting the Central Government to extend the production sharing contract and we expect that it should happen anytime now.
In fact, because of the delay in the extension of the production sharing contract, the Cairn energy investments in drilling more wells has decelerated. We are very keen and as you know, the Cairns finds in Barmer district of Rajasthan today accounts for 47 percent of the on-shore production of crude in the country and in terms of total crude, the Cairn finds account for 25 percent of the total crude production in the country.
Rajasthan, today, is the largest producer of crude oil in the country. We want the spurt in investment to take place. They are ready and are waiting for the production sharing contract extension. They have promised billions of dollars of investment which should also apart from transforming the oil economy, which also should transform the economy of the state of Rajasthan.
Q: While that process goes on for extension, there is also gas which Cairn looks for. We understand that Rajasthan is interested in getting a part of the gas, which Cairn produces. Have you been talking to Cairn regarding this? A: We have started our engagement with Cairn on sourcing that gas for meeting the requirements of gas within the state. We have been in negotiation as you are aware that there are already some gas pipelines which are passing through Rajasthan.
We are trying to develop a gas grid which will cover. We are taking into account the various gas pipelines that are passing through Rajasthan and basically to try and connect different districts to different pipelines and thereby, the development of that gas grid is on and all the major players are involved. All the gas including the public sector and private sector players are on. Meetings have taken place. Q: Let us talk about the power sector now. To be honest, the things do not look very good there - Rs 50,000-60,000 crore debt in that sector. You are part of the Financial Restructuring Plan (FRP). What is the situation as of now because we understand that you wanted to initiate the second phase of debt restructuring as far as your State Electricity Board (SEB) is concerned. What is the status as of now? A: I think the figure that you have quoted is on the lower side. Debt is actually almost close to Rs 90,000 crore. But, the almost Rs 60,000 crore of this debt was accounted for the tenure of the five years of the previous government. Now, balance debt is either for the period prior to that or post that.
This is a problem, which has not come about overnight, but is a problem that has come about over a period of 7-8 years. There are a number of factors, which have resulted in this situation. One is that for seven consecutive years, the tariffs were not revised. This is probably the only instance of its kind in the country. For seven consecutive years, tariff was not revised. Now, that has obviously put the clock back. Therefore the model of development that Rajasthan embarked was debt driven. Basically, it was instead of generating revenues internally, it was basically reliant on loans. Q: But what is the way forward now, because not only Rajasthan, but all of seven other SEBs are in a very bad phase? A: What has happened is that there are 2-3 measures that we are taking at the state level and 2-3 at the central level. At state level, we are trying to privatise some of our distribution as well as our generation assets. If we are able to privatise, you will be able to raise. Two things will happen. One is, you will be able to improve the efficiency of operations and you will be able to generate resources by which we can actually plough back into this sector and three, off-load future liabilities from our balance sheet once it goes out.
We have identified cities which are going under the hammer on the distribution franchise model as the bids are likely to be released maybe by the end of this month. The generation company is at two levels. One generation company is the lignite based company in the public sector which has got its 2:125 megawatt assets in Barmer district. That is going to be privatised. Also, the generation company itself we are thinking of divesting a large part of our stock in the generation company itself. Q: By how much do you want to divest? A: We are actually having dialogue at two levels - one with the NTPC where the NTPC has also shown interest into investing into the generation company in Rajasthan and second level is through consultants actually going in for an open disinvestment.
Both those exercises are currently on and there is a task force which has been constituted. It is headed by the former Union Power Secretary, Mr RV Shahi and he is heading the task force. He is assisting us in this privatisation effort. That is one. At the second level, we want to also leverage the commercial opportunities available in trading in power; the state cabinet has just approved formation of a company which will be tasked with the responsibility of buying and selling power. So far, we are surplus in power in the night. There are many states including the city of Delhi which requires power in the night. So, we should try and leverage the opportunities of sale of power when we are surplus and then buy power when the power is very low.
We have already reduced our power purchase; we have reduced our power purchase unit cost as a result of which already the loss levels have diminished. We have gone in for one hefty tariff increase this year and that tariff increase is expected to net us about Rs 4,500 crore per year. These are some of the initiatives taking place at the state level. At the central level, in fact, on Monday, there is a very high level meeting taking place between the Union Power Minister and Chief Minister of Rajasthan. I will also be there, the entire power sector of Rajasthan, the Principal Secretary of Finance also all there in an attempt to try and address this issue of this debt overhang, because we have been urging the Central Government._PAGEBREAK_Q: What are the options?A: The options that we are seeing is that is three year financial restructuring that was undertaken was too aggressive and the debt overload of this kind, a debt overhang of this magnitude cannot be restructured in a short period of three years. In fact, it made the position even worse. Therefore, we believe that this restructuring has to take place over a much longer period of time. Q: So, you would seek an extension?A: We are seeking that there should be a review of this restructuring programme because the banks have stopped lending and banks having stopped lending, it is only making things worse at the state level. It suddenly cannot close the tap in a limited period of three years. This assistance will have to be faced over a longer period of time. We are entirely on board for the kind of reforms that the central government is wanting us to undertake. But we would want a longer timeframe and a more meaningful and reasonable timeframe to undertake these reforms.Q: Let us shift gears here now and talk about the e-commerce sector. Here again, perhaps, Rajasthan is leading the way and we understand that you want to regulate the sector in terms of bringing it under certain laws. What is the update on that and what is the way forward regarding the e-commerce sector as far as Rajasthan is concerned?A: E-commerce operates at different levels. One is the level where you had these cash and carry stores. We had cash and carry stores - four were in Jaipur. We had Metro in Jaipur and Bharti Airtel in Kota. Unfortunately, what has happened is because of various central policies, the two cash and carry stores in Jaipur have pulled up. There was a event in Delhi - a road show for promoting investment into the state and there Krish Iyer, CEO of Walmart, came and met the chief minister and said that he has surveyed the Rajasthan market and wants to open cash and carry stores in a number of cities and he wants to tap into those opportunities. His only request from the state government is that the State Government should provide land to meet his requirements in each of these cities and land requirement is between 4-5 acres. He is willing to buy that land outright. If that land is made available, he will be able to put up the stores and then Walmart can make a big bang entry in Rajasthan.Q: Let me now talk to you about ease of doing business. There is a initiative by the Department Of Industrial Policy & Promotion (DIPP) to have rankings within states regarding ease of doing business. We understand they has given inputs as far as the state ranking is concerned. What is the kind of ranking that you are targeting?A: We have no doubt that we will feature well within the top five because we have done about 286 parameters that had been identified by the Central Government and all states are being ranked on the basis of their performance against those 286 parameters. We have done our own self assessment and we have fulfilled 240 of those parameters and the balanced 40 odd, a large number of them are not applicable, not relevant in the context of Rajasthan. All states have completed theirs. July 15 was the last day for submission of their report to the Central Government. Central Government has sent consultancy teams and covered all the states including Rajasthan and we are expecting the results out within this month. We hope once the ranking of states takes place, on the parameters for ease of doing business, we should rank amongst the top five if not the top three.Q: My last question to you is the new government in the centre has floated this idea about cooperative federalism. At the same time, it also talks about competitive federalism and asks states to compete to seek out investments in both domestic and foreign. Does this strategy work and how has Rajasthan’s experience been as far as this competition is concerned?A: We are all for competition and this is something - the sense that the Prime Minister has conveyed, which is welcomed by most states. This is something that states have been aspiring for. An opportunity to unleash the competitive spirits of the states and the labour reforms, the reforms in land, and reforms geared towards promoting investments - in renewable energy policies, the mineral policy. The Ministry of Micro Small and Medium Enterprises (MSME) policy, which is on the anvil and the tourism policy as different from the tourism unit policy which has already been released. All these are pointers towards that. I can speak for my state. I am sure similar initiatives are underway in other states. States are vying with one another to try and improve the investment environment within them. Until and unless investments come in, employment and job creation will not take place and until job creation doesn't takes place, the economy and revenues that will accrue to the states will not happen. Without huge spurt in revenues, you will not be able address the issues of social justice.
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