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Same old story in Bengal

Source : BUSINESS_STANDARD
Last Updated: Tue, Sep 11, 2012 04:04 hrs

A few weeks ago, the Bengal government and Sajjan Jindal’s JSW Bengal Steel were finally slated to sign the lease agreement and supplementary development agreement which signalled the end of a long and tortuous road for West Bengal’s largest industrial project. It didn’t happen, thanks, once again, to a quagmire of the state’s governmental procedures.

The plant site is largely barren, except for a steel installation (made at the time of the foundation stone-laying event) and a helipad and a power substation.

Four years ago, on November 2, 2008, JSW Steel laid the foundations for a new beginning in Bengal, with its Rs 35,000-crore steel and power project. The stone-laying ceremony at Salboni — about 170 km from Kolkata — was a grand affair with 35,000 people in attendance, including Chief Minister Buddhadeb Bhattacharjee, and Steel Minister, Ram Vilas Paswan (both former).

For a while, JSW Bengal’s project was an example of one that had gone right in every possible way at a time when the stalling of mega steel projects over land and mining issues had become ubiquitous. Ninety per cent of the land was vested with the government. The little that had to be acquired was done peacefully. Moreover, JSW had offered land owners very attractive terms — jobs, free equity and fair compensation. The project had bagged three mines — two non-coking and one coking — and it even got the special economic zone tag. Few greenfield project of such a size have overcome such hurdles.

Then came a change of regime.

It all started with new Chief Minister Mamata Banerjee expressing her disapproval over the delay, publicly. But, it soon turned out that the company was yet to get a 14Y exemption from the government, which was holding back the lease agreement. The current government’s contention was that JSW Bengal had acquired 300 acres of land directly from land owners without prior approval from the land reforms department. The Land Reforms Act places a ceiling of 24 acres on land acquisition while Section 14Y of the Act exempts the ceiling.

That, however, was resolved in August, with the government vesting the land with it and then leasing it back to the company. But, while JSW has signed the lease agreement with the land reforms department for about 88 per cent of the land, unending issues over a supplementary development agreement (at the insistence of the government) is holding up construction of the 10-million tonne steel plant.

Many other issues cropped up, including forest clearance. JSW is keen on incorporating such external issues in the force majeure clause so that it doesn’t trigger the default clause.

“There are very few points pending, we are in discussions and hope to resolve it soon,” JSW Bengal Steel’s Joint Managing Director and Chief Executive Officer Biswadip Gupta said.

There are definite timelines for the project, and JSW’s concern is not being able to keep to it in the wake of external factors. “We cannot make an exception for them. They should appreciate that we want to keep a standard force majeure clause for all lease agreements. We have recently had a meeting, let’s see what happens,” said West Bengal Commerce and Industry Minister Partha Chatterjee.

There is at least a frenzy of activity in one part of the 4,300 acres. About a 1,000 people, mostly locals, are busy with the civil work in the 30-acre mini township of Ankur. Ankur will be completed by March 2013. That apart, the company has constructed a 34-km boundary wall around the site, which, it claims, is one of the biggest perimeter fences in the country.

THE AGONY OF WAITING
  • September 2006 Sajjan Jindal revives steel project, on a much larger scale, two years after it was announced
     
  • January 2007 JSW Steel signs development agreement with Left Front government
     
  • May 2007 JSW gets permissive possession of 4,300 acres at Salboni
     
  • November 2008 Foundation stone laid
     
  • August 2, 2011 Mamata Banerjee expresses disapproval over project delay
     
  • August 5, 2011 Trinamool Congress government raises questions on land purchase
     
  • August 10, 2011 State government vests land, to lease it back to company
     
  • September 10, 2011 Sajjan Jindal meets Mamata Banerjee at Writers’; CM assures all issues will be settled in a fortnight
     
  • November 1, 2011 State government decides to grant 14Y exemption
     
  • January, 2012 JSW signs lease agreement with land reforms department for 3,800 acres
     
  • July 11, 2012 State government resolves differences, fixes August 9 for signing lease agreement with WBIDC
     
  • Till date lease agreement not signed

In a few weeks, negotiations for acquiring land for access roads, a link road to the National Highway and a rail link, will also start. The company has, more or less, resigned to paying an astronomical price for the strategic points.

“Real estate prices have shot up to Rs 40 lakh an acre,” JSW Bengal Steel Associate Vice-President: Projects G K Saini said. JSW Steel had purchased the private land in 2007 for Rs 3 lakh an acre.

What makes land acquisition in Bengal a near-impossible task is the small holding and a fallout of the Left Front’s land reforms policy, coupled with fragmentation. “There are 42 people involved in the seven-acre rail link land,” Saini said.

That’s nothing compared to what the company will have to deal with in the right of way for the 70-km water line from the Rupnarayana river to the site. JSW has to get around 4,000 villagers on board, compared to a 1,000 for a 200-km water line in Bellary. The transmission line for power is just as long.

Meanwhile, people like Gautam Singh, who gave up his land, seem stuck between a rock and a hard place. Singh is one of the 331 people being trained by JSW for jobs. In a year, when 80 per cent of the crop has suffered on weather conditions, the promised job at JSW is his only hope. “We have very little land apart from what has been acquired. Moreover, this year, the crop has suffered immensely. I am being trained by JSW… I hope the plant starts soon,” he said.




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