A mismatch in expectations

Pipelines and transmission lines have lower resistance to RoW or RoU acquisition than that for industries or power plants, except in cities. But that’s changing, says Janaki Krishnamoorthi, who analyses projects that have been stalled because of public protest against low compensation.

Here’s a glimpse of some of the most problem­matic pipeline projects that have languished because the land owners were averse:

• The Pavana Dam to Nigdi water pipeline being exec­uted by Pimpri Chinchwad Municipal Corporation in Maharashtra hit a roadblock in Aug­ust last year when Maval taluk villagers opposed the land acqui­sition. They alleged that the gov­ernment, which had acquired their land for several earlier projects, had not compensated them ade­quately. To exacerbate the situation, three protesting villagers were killed in a police firing. Since then there have been several protests by farmers demanding action against the police. The District Collector has stayed the project.
• Some villagers in Bantwal and Mangalore taluk of Karnataka are against the Kochi-Mangalore-Bang­alore gas pipeline being built by GAIL India Limited (GAIL) for fear of not being compensated suitably. Villagers in Kerala, Karnataka and Tamil Nadu, the states through which the line passes, are now plan­ning a joint protest demanding an Environment Impact Assessment (EIA) and a Socio-Economic Im­p­act Assessment before implementation.
• A 40 km sewerage line, likely to bring relief to residents of Taleigao, Caranzalem and Dona Paula in Panaji, Goa, is delayed for several reasons including land acquisition.
• GAIL, the country’s largest gas transporter, has stalled pipeline projects worth Rs 3,000 crore.
• Several projects in the power sector, too, have faced protest: Last September, farmers from Jhajjar and Bhiwani villages in Haryana stopped the installation of CLP Power India’s high power transmission lines through their fields, demanding compensation. Over 100 transmission pro­jects have been grounded from difficulty in forest clearances and land acquisition.
Acquiring land for laying gas and water pipelines or setting up power transmission towers/lines has become a major bottleneck in the last few years. The regulations and compensation issues, procedure to be adopted are dealt under different laws like the Petroleum and Minerals Pipelines (Acquisition of Right of User in Land) Act 1962 in case of petroleum pipelines, Indian Telegraph Act 1885 for power transmission lines, etc.

Since many of these lines pass through public areas or government land, an application to the local autho­rities/municipalities is first made and rein­state­ment char­ges deposited. If the proposed route passes through pri­vate property, permission is required from landowners.

This process is cumbersome and time con­suming, say developers. Anil Sardana, Managing Director, Tata Pow­­er, explains: “After obtaining in-principle clearance from State Transmission Unit (STU) and Mahar­ashtra Elec­tricity Regulatory Commission (MERC), the appli­cation for right-of-way (RoW) is forwarded to State Energy Secre­tary to issue a Gazette for proposed ROW under section 68 and 164 of the Telegraph Act. Despite the ROW, separate permissions are needed from the Ministry of Env­i­r­­onment and Forests if the lines pass through forests, Coastal Regulation Zones for mangroves etc. This entire process is time consuming.”

Acquiring land from private owners has become increasingly difficult in recent years even in the cases of RoW and right-of-use (RoU). RoW or RoU allows a company to access the land to construct a pipeline or transmission tower and later return it to the owner for its regular use. It also allows the company’s workmen or gov­ern­ment’s representatives to enter the land for maint­aining, repairing and inspecting the pipelines or trans­mission lines after adequate notice to the land occupier. In emergency situations, such notices are not necessary.

However, once the land is returned, the owner is not permitted to do anything that may damage the pipeline or tower, such as constructing permanent struct­ures, exc­a­vation, digging wells or building reservoirs.

All about the money, honey

The compensation to the owner is determined as per laid down rules by the competent authority, generally a state government officer from the Revenue Department, and if this is not acceptable, then by the District Judge. However, mismatch of expectations between the various stakeholders—the land owners, project deve­lopers/owners and the regulating government autho­rity—has resulted in several problems.

Despite the RoW issued through Gazette, if the pro­posed transmission towers are to be erected in private property, negotiations must be carried out to arrive at a mutual agreement on the use of the property. “Increasing land value results in delay in negotiations with private owners, ” says Tata Power’s Sardana, adding that several of their projects in Mumbai, including the Trombay-Salsette, Salsette-Saki, Trombay-Backbay, Vikhroli-Powai, Kalwa-Salsette , Panvel Vikhroli, Kharghar-Vikh­roli lines are likely to be affected by this delay.

The situation is no different in water pipeline projects. “The major problems encountered in the pro­cess of private land acquisition are the compensation and commercial aspects of the location. The land own­ers demand more compensation at par with market rates whereas the prevailing government rates are applicable for such compensation, which is determined by the concerned district revenue authorities,” reveals M Satyanarayana, Director—Projects, Hyderabad Metropolitan Water Supply and Sewerage Board (HMWS&SB). The Board faced difficulties when acquiring land for their Sewerage Treatment Plan in Serilingampally taken up under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and for the Godavari Drinking Water Supply Project Phase-I falling under Karimnagar, Medak and Ranga Reddy districts in Andhra Pradesh.

Before the project commenced, land acquisition proposals were sent to the respective Land Acquisition Officers appointed by the government. However, private land owners in some of the villages did not accept the compensation offered. The matter was then resolved at Revenue Divisional Officer / District Collector’s level and acquisition completed in phased manner. The project is now expected to be completed only by December 2013.

Rerouting a project is not generally considered as that may again raise similar issues from a different set of owners and also result in time and cost overruns, but a water treatment plant, a major component of the project near Karimnagar, however, had to be relocated since the land owners refused to part with their land.

Does pipelined land really depreciate? The expe­rience of developers has been that even after they have the RoW, farmers and other landowners often refuse to honour the agreement, demanding higher compensation. This leads to further negotiation all of which not only delay the project but also increase the cost. The landowners claim that these projects depre­ciate the value of their land due to restrictions imposed on their use which in turn reduces their right over the land and hence demand a higher compensation. However oil companies maintain that in rural areas where the land is being used for agriculture the pipeline will not make any difference as the farming activity can be continued and there is no question of land value going down. The land value issue arises only where urbanisation is taking place and the land use pattern is likely to change.

Predictably, the issue is more acute in urban areas. As per the Petroleum & Minerals Pipeline Act 1962 (PM&P Act) for ROU, land compensation is paid at 10 per cent of market value of the land.

But as a senior official from a petroleum company explains, restrictions imposed on the ROU corridor reduce the market value of the land and the compensation is less as compared to the commercial disadvantage the ROU imposes. Though this does not affect continuation of farming, negative commercial impact is envisaged for any future change of land use.

Regulation reforms

Many industry professionals believe that the existing regulations are inadequate to deal with the issue and should be amended. Indeed, the Telegraph Act of 1885 covering the land acquisition for power transmission lines and P&MP Act does not address the issue of compensations for ROW directly.

“There is no need for any revision in the P&MP Act is concerned, as there is no specific formula laid down in the Act,” says a senior official from the Union Ministry of Petroleum and Natural Gas who did not want to be named. The Act says the compensation should be deter­mined by the competent authority, based on the prevai­ling market rates of the land and accordingly the compensation is computed. The question, the offi­cial says, is how to arrive at the market rate and how ROW should be linked to land acquisition. According to him the 2011 amendments to the Land Acquisition Act, 1894, with higher compen­sation, better rehabilitation to losers of land to deve­lopmental purposes may help in resolving the ROW issue, if a proper formula is worked out. Higher com­pensation recently has worked very well but experts worry about the sustainability of this method.

Increasing the ROW compensation rates suitably which is also acceptable to the industry, creating aware­ness among the land owners on the project benefits, understanding their problems and clearing their fears of losing their land would go a long way in resolving the issue, say industry professionals.

“It is essential to ensure that the compensation package is on par with the market value to make the land owner spare the land,” says Satyanarayana. “It is also very important to create services through the pro­posed land acquisition for the general public. Involving NGOs / local public representatives will further add to ease out the land acquisition process.”

Tata’s Sardana believes that a friendly neighbour attitude has always worked for his company: “As a company, we believe in being ‘a neighbour of choice’ and have not just adequately compensated our commu­nities across various locations but also focused on crea­ting sustainable livelihoods for them to make them self-reliant and lead a happy life. We believe that being a partner in their long term development is the only way to address this issue.”

The brewing discontent among the private land owners is spreading wider even in rural areas, as borne out by the increasing number of protests all over the country. There are several litigations too pending in various courts too. It is high time the government tackles the issue effectively to pave the way for smoother development of public utilities in the future.