...but limited time, assessment of PAPs and other complexities will make the activity very challenging, says RP Ritolia.
Year 2013-14 was probably the most chaotic environment for mining sector as the so-called "coalgate" scam continued to haunt the industry and many coal blocks at in a danger of being deallocated. Inordinate delays in clearances further dragged the mining sector backward.
Coal India had to face strikes that impacted its production. Although a number of new projects have been lined up both by public sector and private sector, most of them are grappling with the clearances at various stage.
R&R is definitely one of the major concerns. There needs to be a paradigm shift in the total approach on R&R for successful implementation of any project.
Cost offset: It is expected that captive mines will be auctioned this year. Many of these lie in heavily populated area making land acquisition (LA) and R&R are imminent. This will weigh heavily on the investors and the response may not be very encouraging in blocks with huge requirement of LA and R&R. As per our preliminary assessment of a project involving LA and R&R, the cost towards compensation and rehabilitating and resettling project affected families (PAFs) will cost around Rs 1 crore per family.
Cost of R&R itself will go up significantly, but the process of R&R is likely to be less turbulent and hence project delays on account of local disturbances will offset the cost escalation. Since, as per the law, there is a provision for execution of R&R plan in phases, and will place less pressure on the project proponent and project execution and R&R could be dovetailed with some time lag. Pressure on the bottomline is essentially a tradeoff between cost of R&R and return generated on this cost.
The land factor: As per the recent enactment of the new land acquisition law, provision of R&R is applicable only when the required area of land exceeds a threshold set by the state government. Now it is imperative on the part of the states to publish the threshold limits of various categories of land and unless that happens, companies needing R&R will perhaps in limbo. However, in cases where large scale displacement is required or anticipated, companies would probably abide by the provisions of this act. The onus is on the government to execute the R&R plan, while the project proponent is only required to deposit the requisitioned amount for R&R.
The biggest challenge in successful execution of R&R plan is to rehabilitate and resettle all affected within 18 months of award of compensation. Given the significant levels of infrastructural facilities and other amenities to be provided this 18 month time appears to be less than adequate. Even if it was not for 18 months, successful delivery of an R&R plan is likely to be very challenging for the government in view of complexities involved. Apart from this the one major challenge will be the assessment of PAFs in view of the broad and inclusive definition of affected families.
Smooth shifting of project affected people with least disturbance is one of the biggest challenges in R&R. Though the Act provides compensation in different forms, timely outlay of full compensation to the project affected families is a critical success factor.
Many land owners don't have proper ownership record. Similarly many project affected persons will find it difficult to prove livelihood dependence on the project site. Hence this adds to complexity in executing LA and R&R activities. Acceptability of rehabilitated people by the people already staying in and around the R&R site is also important.
Annuity benefits: Although the type of compensation is for the affected family to decide, from a company's point of view, the option of annuity for 20 years appears to be most favourable. In case of a job provision, there is a need to train people to a level acceptable to the organisation for its efficient working. This appears unreasonable as it would difficult to get all the people trained for company's need for various reasons. A one-time compensation could be detrimental as there would be one time capital outflow and that once people have received one-time compensation, they would not be having enough motivation to see that the company stays there for long.
The author is Advisor to MD (Coal), Tata Steel Ltd, and ex-CMD, Central Coalfield Limited (CCL)