Land acquisition is such a sticky problem because land value can be variously estimated and therefore debated. Some states that have implemented incentives have benefited—such as one for not exercising litigation.
Experts:
Anil Sardana, Managing Director, Tata Power Company Ltd
Amit Gupta, CEO—Pipelines and Terminals, Essar Projects (India) Ltd
MS Akhtar, Business Development Director—India, Acciona Agua SA
What financial and other kinds of impacts will ensue from land acquisition at market prices? What has been your practice in acquisition of (or complying with) rights of land for pipelines?
Sardana
Land acquisition has emerged as one of the most contentious issues in infrastructure projects, often leaÂding to delays. A major challenge faced by the industry is how to unearth the actual market rate when the regisÂtry of land parcels around may be taking place far below market rate. When agricultural land is acquired, the seller starts demanding potential price calculated for a stage when all the development has happened and thus what could be the price after that. Alternatively, if such land owners are in a bargaining position, they start to demand exorbitant prices. Added to that issue, if the land rates are high or delayed in terms of acquisition, the project becomes unviable. This is why the government needs to have clear guidelines and policies on the issue.
Gupta
The Petroleum and Minerals Pipeline (PMP) Act of 1962 and its 1977 amendment provide acquisition of right of user in land for laying of petroleum and minerals pipelines, and extends to whole of India except for the state of Jammu & Kashmir. However, in instances wherein there is no alternative to the stiff resistances of certain land owners, the compensation prices are custÂomised and only thereafter rights are acquired.
Our company has recently delivered the world’s second largest iron ore slurry pipeline spanning a length of 270 km and executed in a highly undulated terrain of Chhattisgarh-Orissa-Andhra Pradesh.
In certain regions of eastern India, the ownership of land is unknown, making it quite difficult for the pipeline owner to lay pipelines in these regions.
Further, to the detriment of the situation in recent times, availing permission and clearance from the Ministry of Environment and Forests (MOEF) has become rather difficult. The situation prevailing in Paradip-Ranchi-Raipur product pipeline being laid by Indian Oil Corporation, wherein they have not been able to obtain clearance from MOEF for the past year, is an example of this new problem in acquiring rights to land for pipelines.
Do you believe foreign direct investment (FDI) in infrastructure will be smoother as a result of these amendments, if implemented well? (Most foreign companies are deterred by the country’s land acquisition difficulties.)
Sardana
We believe that the Land Acquisition, Rehabilitation and Resettlement (LARR) Bill, 2011, when approved, will bring in changes to the entire land acquisition practice. Passage of a law on land acquisition is critically important as land-related issues are holding up industrial projects worth billions of dollars across the country. However, at the same time, the provisions of the Act need to be practical, or it would become unworkable.
What is the best method to link right-of-way (RoW) or right-of-use (RoU) for pipelines with compensation and pricing?
Gupta
The structure in the PMP Act is fair basis compenÂsation. However, some sections should be revised in the Act to curtail undue demands of certain individuals or groups. Additionally, from time to time, the compensation should be reviewed for amendment to cover inflation burns and other basic necessities of the affected.
Recent times have shown scarcity of land and its multi-fold appreciation in a short span of time. This consequently has increased the input cost for projects which in turn is affecting the consumer/end user. The government should come up with some policy to rationalise such matters. Dedicated, common corridors for pipeline network akin to the National Highways may prove to be a workable solution.
Akhtar
RoU and RoW should always be the responsibility of the government (urban local body, etc) and not the contractor. That way, time and cost overrun of the projects can be avoided.
What amendments should be made for best balance between social and commercial goals of land?
Gupta
The best balance can be obtained only when all the stakeholders of the project enjoy appropriate benefits from the project. Because the village locals are the most important but the weakest of the all stakeholders, it should be a prime responsibility of the acquirer to ensure that they are the least affected. This can be done by driving high Corporate Social Responsibility (CSR) activities through affected areas and providing work opportunities to locals. At locations where land needs to be permanently acquired for stations, substiÂtute land should be provided as compensation and some reasonÂable monetary benefit should ensue to the affected.
Secondly, the compensation under the present Act is quite meagre as compared to the increase in the land cost in the recent times. The Act should be suitably modified to address such issues.
It is currently essential to obtain clearances from local village bodies for pipeline use of land. Is this a good practice? How has your experience been? Do government authorities help in case of sticky land acquisition?
Gupta
It is certainly a good practice to avail concurrence from local village bodies since it facilitates quickest solution to grievances, if any, of particular individuals of the village during execution of work. The local body is the nearest in vicinity to address the issues of locals and proves more effective at times.
Over the past many projects we’ve executed, we have undergone varying experiences with local village bodies from good to bad in terms of settlement of griÂevances through monetary benefits. Recently in one of our recent projects executed in UP, we had to face violent resistance from locals. Our positive approach to local village body proved futile since there was a greedy interest shown by the entire local. The local adminisÂtration (government authorities) was called to intervene and somehow an amicable solution was arrived upon but at a steep financial implication on either parties.
Yes, the government authorities do help in resolving sticky land acquisition as they have power to intervene and take legal actions. In general, the decisions from such authorities are bound to be obliged by locals.
Akhtar
No, it is not a good practice. Our experience has been bad. The contractor generally does not get real help from the government authorities.
Which models of land acquisition, perhaps as exemplified by some states, will work best?
Sardana
Under the Constitution, states have the legislative competence to enact laws relating to land. Facilitating land acquisition is one of the three main aims of state land legislations in India, the other two being regulating administration and development and introÂducing land reforms.
In addition, they have a significant role to play in the R&R process of those involuntarily displaced. So while the Land Acquisition Act 1894 provides the principal framework for land acquisition in the country, the states have adopted it for application within their respective jurisdictions. Rarely has a state made any substantive amendments to the framework of land acqÂuisition laid out in that Act.
Haryana was among the first in India to come up with a land acquisition policy that took care of interests of people whose land (and thereby, livelihood) was being forcibly taken away for ‘public purpose’. Indeed, the revised national land acquisition policy and the policy of UP government as discussed above draw a lot of good from Haryana.
A major innovation introduced by Haryana in 2010 is the ‘No Litigation Incentive’. Under this incentive, designed to reduce avoidable litigation around land acquisition, an additional 20 per cent of the basic rate of land determined by the Land Acquisition Collector would be paid as incentive to landowners who do not challenge the acquisition of their land, and accept the compensation awarded as final. States such as Jharkhand and Orissa have also brouÂght forth policies that mirror the provisions outÂlined above.
Broadly, the direction of land acquisition policy seems to be enhancing incentives for the displaced, incÂluding these who do not own land or who have encrÂoached on land in the project area. Rights of women are also being recognised, with policy allowing for comÂpeÂnsation to be paid to women. Under the 1894 Act, only male heads of households are entitled to compensation.
Another key development is proposals for payment of annuities so that long-term livelihoods of the displaÂced people are secured. Similarly, a provision in the pending 2011 law relates to paying part of increased value of land to the original owners every time the parcel of land changes hands, within a specific period of time.
What innovations do you believe should be brought into land acquisition? Does the country have lessons to take from such innovative measures from some of the states? Can you identify these innovations?
Sardana
One of the major innovations that should be impÂlemented in land acquisition is that the beneficiaries receiving compensation ought to be counselled on effeÂctive deployment of the large amounts they receive as lump sum payments.
Often, that money is squandered away for unproÂduÂctive purposes or, worse, the beneficiaries are duped by unscrupulous elements who promise them windfall gains. Imparting some level of financial literacy to the beneÂficiaries would go a long way in ensuring their long-term security.
Second, although provisions for employing one member each from the project affected families exist, it is seen that most of this employment happens at the lowest rungs of the industry, because of inadequate skills. If a training mechanism that can help in better opporÂtunities for the project-affected person can be evolved, it would be socially beneficial.
Gupta
In general for private players, acquisition of land for pipelines seems a tedious task and comes at a premium price. As compared to Public Sector Units (PSUs) and state government-owned companies, private players do not enjoy the blanket cover of central and local admÂinistration to acquire land, and this puts private players on the backfoot.
Recently, the Petroleum and Natural Gas Regulatory Board (PNGRB) has opened doors for pipeline projects on BOT basis, such as the recent Mehsana-Bhatinda gas pipeline, Bhatinda-Srinagar gas pipeline and MallÂavaram-Bhatinda gas pipeline (which was won by GSPL consortium) and Surat-Paradip pipeline (won by GAIL–EIL consortium). This is a new concept in India where any company can bid for the project and become the owner of such pipeline.
For any pipeline, numerous authorities need to be approached for acquiring various clearances/permissions, this subsequently slows the project progress. We are of the view that in order to make the pipeline laying environment conducive, the government should think of creating a concept of single window clearance.
Leave a Reply
You must be logged in to post a comment.