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Thursday, 07 February 2013 00:00
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MoEF nod doesn't prevent GMR/GVK-type exits

Given that 32 road projects, including the prestigious ones the GMR and GVK groups walked out of, have been held up due to their environment and forest clearances not coming through, the environment ministry’s decision that Gram Sabha clearances will no longer be required has to come as a shot in the arm. According to the ministry’s decision, it’s not just roads, any ‘linear’ project—electricity lines, oil and gas pipelines—will not require such permissions since the land needs of such projects are relatively small. And given that such linear projects span large distances, the number of Gram Sabhas from whom clearances would be required is quite large.

It would, however, be premature to conclude that, had this clearance come earlier, developers like GMR and GVK would not have walked out of their projects—in just the GMR project, the company had promised to pay the National Highways Authority of India (NHAI) R9,000 crore on an NPV basis. In the case of the GMR project, for instance, the Gram Sabhas involved had given their clearances and, it was based on this, that the state governments involved had also cleared the project. The project, however, had got stuck in the environment ministry. Though the environment minister later said the clearances had not been given because NHAI’s application for the clearance was incomplete, this is a point refuted by NHAI officials in private. Another reason, and that had nothing to do with the environment ministry, was NHAI’s inability to clear the tolling rates for the project. Some years ago, in order to ease financing, the government had authorised developers who were widening 4-lane roads to 6-lane ones (or 2-lane to 4-lane ones) to charge tolls on the basis of the final number of lanes even as the road was being widened. While this would have increased GMR’s collections, NHAI failed to notify even the new toll schedule.

Similarly, in the case of the GVK project, the reason why the company walked out had nothing to do with Gram Sabha clearances. In this case, the company needed to clear some boulders along the highway which needed forest clearances. These clearances, however, were not forthcoming.

That the government has a long way to go in getting its act together on clearances is, of course, best brought out by what transpired in the case of 73 oil blocks that were the subject of the Cabinet Committee on Investments meeting last week. While the defence ministry was finally persuaded to withdraw its objections to all but 7 of the blocks, the defence ministry says it had conveyed its objections to the oil ministry even before the blocks were auctioned. If this is correct, what kind of government decision-making allowed the blocks to be auctioned in the first place? In other words, the bypassing of the Gram Sabha nod is a good thing in road projects, but there are many more roadblocks that need negotiating.


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