ANALYSIS
Rush to clear mega projects may rewrite rules of business.
The countdown has begun. The general election is only months away. The last green roadblocks may now be bulldozed to push growth by a now sluggish, now exposed government.
The Project Monitoring Group (PMG) constituted recently by prime minister Manmohan Singh has decided to take up big infrastructural projects stuck for green clearances with the project proponents and officials from the ministries of environment and forests, power, port and road on a weekly basis. Coming five and a half months after the formation of the Cabinet Committee on Investment (CCI), this is the government’s last ditch effort to bypass environmental bottlenecks (laws to the rest of us) stalling investment.
In his budget speech this year, finance minister P Chidambaram told parliament that two meetings of the CCI had already taken some key decisions regarding a number of oil and gas, power, and coal projects. Hours later, the prime minister underlined that the CCI would take up issues related to wildlife, forest and land (tribal rights) clearances to tackle regulatory roadblocks.
The UPA’s intentions became clear two years ago. No sooner than the Reserve Bank blamed environmentalism for a one-third dip in foreign investment, the PM broke his silence to underline how it was “necessary to ensure that these (green) regulatory standards do not bring back the License Permit Raj”.
Last year, Chidambaram sprung the proposed National Investment Approval Board (NIAB) which was to unilaterally offer prompt one-window clearances to projects worth Rs 1000 crore or more. Plan panel chief Montek Singh Ahluwalia went on to assure skeptics that under the prime minister’s chairmanship, such a body would not take arbitrary decisions. Of course, he forgot that the National Board for Wildlife that has a dubious record of clearing dubious project proposals by overruling its independent members, is also chaired by the PM.
The board, however, met with strong opposition from environment minister Jayanthi Natarajan who refused to surrender her ministry’s role in examining the merits of such projects. The NIAB proposal was scrapped, and the CCI was set up in January, roping in representatives from different ministries. But the agenda did not change. The UPA government was desperate to circumvent forest and wildlife laws — its legacy from the years of Indira Gandhi — and the Forest Rights Act, its own showcase achievement.
According to the Centre, around 215 projects worth over Rs 7 lakh crore, for which bank loans have been made available, are held up mostly due to delay in environment and forest clearances and the lack of coal supplies. But why was bank funding made available to projects whose environmental viability was in question? But of course, with everything else in place, the green clearance became more of a compulsion than a decision to be taken on ecological ground.
Highway projects, for instance, line up at the MoEF’s door once they have completed construction in non-forest stretches so as to force the ministry’s hand.
If it’s not infrastructure, the bogey raised is that of energy security. Here, the argument is that India should not have to import coal while sitting on a 100 billion tonne reserve. In fact, it doesn’t need to. The annual production deficit of coal is around 20 percent. Coal minister Shriprakash Jaiswal himself conceded that but for corruption and inefficiency, productivity could increase by 25-30 percent.
Now factor in a 25-35 per cent transmission loss of power generated by burning coal. A long overdue investment in grid reform can lower the demand for coal by at least 20 percent.
While demanding vast tracts of virgin forests to be opened for mining, most private miners are interested in hoarding rather than mining the allotted reserve.
The same profit motive is at work when power utilities flash their import bill to pressure Coal India Ltd (CIL) for subsidised coal instead of procuring at non-subsidised prices through e-auction from CIL.
Yet, we seek more coal mines and strive to exceed mining targets as the first and foremost solution to the energy deficit. Such was the enthusiasm that in February, the CCI had to clarify to CIL executives that they could not be given immunity against prosecution for violating green norms because they were only trying to strengthen India’s energy security.
Others have been luckier. Congress MP Naveen Jindal, for example. Now in the dock for alleged involvement in the coal scam, Jindal’s Jindal Steel and Power began construction at its Angul plant in Odisha without obtaining clearance for the forest land and was served a notice by a divisional forest officer in July 2009.
In February 2011, the MoEF absolved its MP.
Under UPA II, 99 per cent projects have been cleared and the average clearance time has been reduced from 5 years during 1982-1999 to just 11 months. The long delays blamed for hampering growth are the result of the project proponent’s insistence on sidestepping laws and associated statutory provisions.
Given such a state of affairs, if the prime minister really wanted transparency while fast-tracking the clearance process, he could have insisted that every project factor in environmental viability and costs at the conception stage instead of bypassing legal restrictions and legally binding green safeguards later. Nothing stopped the government from finalising the go, no-go forest area map which would have ensured that no developer, government or private, pushes projects in the best forests and ecologically most sensitive areas of the country.
But, as Montek gave out last September, it is not his government’s intention to have any rules or regulations for a certain class of projects. Chidambaram’s “excellent idea” is, Montek was quoted as saying, to amend the rules of business for projects above a critical size so that “the permission that has to be given is given”.
The author is an independent journalist based in Delhi.
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