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 percent 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 (CIL) for subsidised coal instead of
procuring at nonsubsidised 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 rule 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”.
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