Land Acquisition Issues 5.0

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Land Acquisition and Environmental Clearances

in MaharashtraInvestor After care

October 2011

STRATEGIC MANAGEMENT GROUP

This is a confidential document solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for

distribution outside the client organization without prior written approval from Tata Strategic Management Group. This material

was used by Tata Strategic Management Group during an oral presentation; it is not a complete record of the discussion.


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TABLE OF CONTENTS

Context

Case Studies of Projects with Land Acquisition Issues

Land Acquisition Bottlenecks

Success Stories

Key Characteristic of Successful Land Acquisitions

New Land Acquisition Draft Bill


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STRATEGIC MANAGEMENT GROUP 2

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CONTEXT

Land acquisition and environment are critical issues in development ofinfrastructure and industrial projects

Power, water and transport are the key sectors within Infrastructure to support industrial development

Current infrastructure spend as % of GDP is ~ 7.25%. The long term goal of the Planning Commission,

Govt of India is to increase it up to 11% of GDP

Investment infrastructure in XIIth plan is estimated at ~ $ 1 Trillion

Role of private sector has shifted from being merely contractor to developer with significant contributions

(~ 30%) in total infrastructure spends. This contribution is likely to increase further in coming decade.

Most of the large industrial and infrastructure projects require large tracts of land. The unavailability of a

single title holder of land spanning a large area (of more than 100 acres) and lack of reliable land banks

necessitates the land acquisition process

A lot of times the land identified for development faces issues on three key reasons

Environmental concerns

Social wellbeing concerns

Benefit sharing concerns

More than half of critical infrastructure projects in the country are delayed due to land acquisition and other

environmental issues leading to massive cost and time overruns

A large number of infrastructure projects in Maharashtra itself are also delayed by similar issues.


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NAVI MUMBAI AIRPORT

Navi Mumbai airport has been delayed with environmental and landacquisition issues

Key issues faced

Proposed Navi Mumbai International Airport is a expected to come up at Kopra- Panvel area

It is being developed through public-private partnership (PPP) with private sector partner, AAI and Govt. of

Maharashtra


Construction would involve reclamation of low-lying areas in an ecologically fragile

zone

Destruction of several hectares of mangroves

Diversion of Gadhi and Ulwe rivers thus raising concern of flooding

Land Acquisition concerns

High land price / stake demanded by villagers in the project

Rehabilitation of displaced villagers

Source: Tata Strategic Analysis

Notes : 1) AAI : Airport Authority of India

Current status of the Project Environmental clearances have been obtained


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JAITAPUR NUCLEAR POWER PLANT

Jaitapur nuclear power plant is facing delay in start of construction due toenvironmental issues

Key issues faced

Jaitapur Nuclear Power Project is a proposed 9900 MW power project of NPCIL1 to be developed in

Ratnagiri district

Envisaged to be the largest nuclear power generating station in the world2


Jaitapur lies in a seismically sensitive area leading to fears of an earthquake and its

consequences on the nuclear plant

Dumping of radioactive waste from the plant would represent huge challenge

Release of warm sea water (used for cooling) into the sea might cause destruction

of fisheries in the nearby sea

Land Acquisition concerns Agitation and protest surrounding land acquisition


Notes : 1) NPCIL : Nuclear Power Corporation of India Limited 2) By electrical power rating

Current status of the Project Strong opposition by farmers



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LAND ACQUISITION BOTTLENECKS

Inadequate compensation, rehabilitation issues & environment clearances arekey issues to address in successful implementation of infrastructure projects

Inadequate compensation or forcefulland acquisition at lower compensationgives rise to unsatisfied stakeholders

1

Compensation

3

Environmental

clearances

2

Rehabilitation&

Resettlement

Landacquisitionbottleneck

1 Compensation

In the absence of clear rehabilitation andresettlement guidelines, original landowners feel excluded from the gains ofthe project

2 Rehabilitation & Resettlement

Failure to obtain required environmentalclearances may throw project out of gearat later stage

3 Environmental clearances




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MAGARPATTA CITY

Inclusive growth of land owners make Magarpatta city, a unique landacquisition model

Key successfactors


123 farm families in Pune pooled 400 acres of farmland and set up a private limited

company that developed a commercial-cum residential project

Farmers share in the company is in proportion to the value of their land

The revenue accruals for farmers includes dividends from the shares, rent from

tenants and income from contractual work for the company

Land pooling by owners to increase bargain power

Inclusive growth for all stakeholders by ensuring preference to family members of

shareholders in employment generated by the company

Right of the landowner to have a say in the development process and accrue the

benefits thereof Safeguarding original owners ownership over land

Preference to private limited company over cooperative structure

Salient Points


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DELHI AIRPORT

Dedicated team and support to affected people along with satisfactorycompensation package made DIALs land acquisition smooth

Key successfactors


Delhi International Airport Limited (DIAL) was trying to acquire ~90 Acres land which

had acquisition and compensation issues. Also ~1500 families were living on that

particular land parcel. The major challenges faced by DIAL were:

acquisition of land parcel involved in litigation

Removal of encroachments on some parts of land already owned by AAI

Rehabilitation scheme entailed the provision of alternative residential sites and

monetary compensation

Compensation for land and the structures on it

Dedicated team familiar with local culture and language for land acquisition and

evacuation

Assistance to project affected people in evacuation and by providing transportationfacilities and labour

Support in terms of medical facility and basic amenities at evacuated and

rehabilitated site

Salient Points


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KEY CHARACTERISTIC OF SUCCESSFUL LAND ACQUISITIONS

Source: Tata Strategic Analysis, India Infrastructure report 2009

Open communication and satisfactory compensation would lead to successfulland acquisitions

Avoid productive land

E.g. Mundra Port had relatively smooth land acquisition as land was identified in kutch region which was arid

Direct communication with locals

As confidence and trust building measure

Appropriate compensation package

Share of future profit of the project

Careful communication about the project

To ensure smooth land acquisition, the process needs to be more inclusive


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NEW DRAFT BILL FOR LAND ACQUISITION

Source: New draft bill for land acquisition

New land acquisition draft bill addresses some of the issues mentioned earlier

Compensation

Market value of land plus value of

asset attached to the land, plus 100%

of total compensation as solatiumNational Land Acquisition and Rehabilitation

and Resettlement Bill, 2011

Rehabilitation and resettlement Apart from subsistence allowance,

20% of appreciated land value within

10 years to be shared with original

owner

For livelihood loser, apart from

subsistence and one-time

resettlement allowance, mandatoryemployment for one member per

affected family or Rs. 2 Lakhs

Remove a big roadblock to industrial investment

Aims to address rehabilitation and resettlement

(R&R), providing safeguards for both land owners

and livelihood losers

Clearly defines the public purpose for which land

can be acquired by the government.


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SUSNATO SEN

TATA STRATEGIC MANAGEMENT GROUP

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INDIA

Phone: +91 22 6637 6655

Fax: +91 22 6637 6600

e-mail: [email protected]

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Phone: +91 11 2332 7072 Ext 118/131

Fax: +91 11 2332 6265/6855

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Contacts at Tata Strategic


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Land Acquisition Issues 5.0