Firms often understate green impact of projects

In May 2017, the Odisha Industrial Infrastructure Development Corporation (IDCO) initiated the construction of a boundary wall in the Erasama block of Jagatsinghpur district. This parcel of land is made up of plots obtained through land acquisition, private purchase and diversion of revenue ‘forest’ land, all under productive use by local betel farmers. IDCO was in-charge of making this land available to the South Korean company POSCO for their steel plant and port despite stiff opposition from local farmers. Now, though this project has failed, the Odisha government has permitted IDCO to fortify this as a ‘land bank’ using police protection.

The largest FDI project, POSCO had got tangled in a web of legal cases. Land acquisition and forest rights were challenged in the High Court, and its environment approval was litigated in the National Green Tribunal (NGT). The NGT case revealed a major discrepancy in how land and natural resources are allocated to projects. It found a huge difference between land committed to POSCO by the state and what was actually needed for the construction of a production unit of 4 million tonnes per annum (MTPA). This is the capacity for which POSCO had sought its environment clearance. 

Stating that land should be ‘optimised’ based on the approved capacity, the NGT sent back the project’s approval to the environment ministry for a review. It held that the 12 MTPA steel plant for which the MOU was signed “ is an uncertain contingency”. The Ministry’s expert committee concluded that the optimisation of land could be done only for 8 MTPA, as a lesser capacity would be economically unviable. It also stated that POSCO’s original plan for a larger capacity plant had ‘remained unchanged’ even though the Ministry was given a 4 MTPA plant for assessment of impacts all along.

Recently, a coal mine in Surguja, Chhattisgarh applied for an approval to increase extraction of coal to 15 MTPA stating that this will be done within the 2,700 hectare of land allocated to them. The environment clearance granted in 2011 permits them the use of only 1,300 hectare of land for the first 15 years to extract 10 MTPA. At that time, these expansion plans were not disclosed. Now, within five years of the mine being in operation, the proponent wants to extract and transport more than what was allowed. 

These cases point to the gap between industrialisation rhetoric and reality. Projects are granted large parcels of land even before economic, social and environmental viability of investments is ascertained. Project proponents present conservative estimates of their project size and land and natural resource use in their EIA reports. Instead of revealing the full plan that is high on social and environmental costs, projects prefer to go through the route of seeking incremental clearances for ‘expansion’. Investors claim that expansions should be approved as no additional land will be required, thereby implying that additional impacts will be negligible.

However, scale is an important factor in planning for land and natural resource allocation. For example, the 300 MW thermal power plant in Kutch, Gujarat occupies 316 acres of land of which 196 acres is for ‘future expansion’. Though the project has been unable to sell power since its commissioning in 2015, the land remains in the company’s possession. A 2014 analysis by a TV channel indicated that close to 45 per cent of the land acquired through land acquisition is lying idle in five Indian states.

The Kutch power plant uses air-cooled technology. If expanded to another 2,600 MW as was originally expected, the project will have to resort to cooling its turbines by extracting and releasing hot sea water. This will affect close to 6,000 coastal fisherfolk in the area.

Investors may consider securing land on the basis of inflated projections and conservative environmental assessments as a smart business move. But these practices cause conflicts on the ground and delegitimise such ventures. 

The authors are with CPR-Namati Environment Justice Program