Adani’s Mundra SEZ gets environment clearance6 min read . Updated: 16 Jul 2014, 11:09 PM IST
Clearance will allow APSEZ to set up primary infrastructure to be provided to firms setting up business units in SEZ
Mumbai: Adani Ports and Special Economic Zone Ltd (APSEZ), India’s largest port developer controlled by billionaire Gautam Adani, has secured environmental and coastal regulation zone clearance for its controversial SEZ in Mundra, Gujarat, from the ministry of environment and forests (MoEF), a day after the Supreme Court asked the ministry to take a call on the matter within eight weeks, one way or another.
The clearance, which comes less than two months after the Bharatiya Janata Party-led National Democratic Alliance (NDA) assumed office at the centre, will allow APSEZ to set up primary infrastructure to be provided to business units in the 8,481-hectare SEZ.
“With the grant of environmental and coastal regulation zone clearance, all issues related to the same now stand resolved," APSEZ said in a statement on Wednesday.
SEZs are industrial enclaves, deemed foreign territories from the perspective of several economic laws. Industrial units in the SEZ benefit from a complete waiver on import duty, excise duty and service tax on the capital goods or raw materials they procure.
The Mundra SEZ is the largest of such enclaves and houses India’s largest merchant port in terms of cargo handling capacity. The Adani group has invested at least ₹ 20,000 crore for development of the SEZ and port projects, said a company official who did not wish to be named.
The project has been mired in controversy. In January, the Gujarat high court ordered the closure of the 12 operational units in the industrial enclave run by APSEZ. The 12 units, according to the high court, were operating despite a May 2012 high court order that all units in the zone be shut down due to lack of environment clearances.
The January order was in response to a public interest litigation (PIL) filed by the villagers of Navinal, near Mundra. According to the villagers, the company had violated environment norms by allotting land to individual units without the mandatory environmental clearance required under the Environmental Impact Assessment Notification of 2006.
In the same month, the Supreme Court granted an interim stay on the Gujarat high court order, allowing all the units to continue to function, but restrained them from carrying out further construction. At the time, the court also gave the environment ministry three months to take a call on the clearances.
Companies including Thermax Ltd, Ashapura Garments Pvt. Ltd, Terram Geosynthetics Pvt. Ltd, Dorf Ketal Speciality Catalyst Pvt. Ltd, Oriental Carbon and Chemicals Ltd and Oil Field Warehouse and Services were among the petitioners that challenged the high court order.
Anand Yagnik, lawyer for the Navinal villagers, said that he hadn’t yet seen the environment ministry’s order and so he could not comment on it immediately.
“We are very disappointed and frustrated, we did not expect this from the new government. Poor and backward people also voted for this government and wanted them to find solutions to our problems," said Naran Gadhavi, president of Kheti Vikas Seva Trust, a trust set up by local farmers. “We have fought a long battle for our livelihood and almost 20,000 fishermen will be affected."
Gadhavi said the group will challenge the clearance in the courts.
The Gujarat high court in January had ordered the ministry of environment to take a decision in 30 days.
“The grant of the environmental clearance to Mundra SEZ by MoEF will encourage investment in SEZ and the development is expected to be at a much faster pace as it provides seamless connectivity through sea, rail and road," Gautam Adani, chairman of Adani Group, known to be close to Prime Minister Narendra Modi, said in the statement on Wednesday.
Shares of APSEZ rose 6.82% to ₹ 281.1 at the close of trading on the BSE on a day the benchmark Sensex index rose 1.27% to 25,549.72 points.
The NDA government has pledged speedy clearances to stalled projects as it seeks to revive economic growth that slumped to sub-5% levels for two consecutive years.
The Mundra SEZ will host industries which will generate additional cargo volumes for the Mundra Port. Adani owns and operates five ports—Mundra, Dahej, Hazira, Goa and Visakhapatnam in India. In the previous year, Mundra Port crossed the 100 million tonne mark in terms of cargo handling.
Adani recently acquired Dhamra Port, located in the state of Odisha, thereby marking its entry on the east coast of India. It is also setting up ports in Tuna Tekra, Mormugao, Kandla and Ennore.
Approval for the Mundra project will give a boost to the port-based SEZ, said Atul C. Kulkarni, an independent maritime consultant. “This will also give fillip to other port-based SEZs in the waiting at Kandla Port (Gujarat) and Jawaharlal Nehru Port (near Mumbai). Port-based SEZs will help to enhance the foreign trade of the country," Kulkarni said.
The environment ministry granted the clearance for the Mundra project on Tuesday, a day after it was pulled up by the Supreme Court for delaying the approval process.
The clearance letter, which has been uploaded on the ministry’s website, has a list of 20 specific conditions, 24 general conditions for the construction phase and 20 general conditions to be met when the SEZ starts operation.
Conditions include proper conservation of the creeks, river and the mangroves in the area and submission of the latest satellite map once a year for comparison with the reference satellite map of 2005 to ensure that there is no modification in the topography.
The clearance letter adds that the company will carry out an inspection study once a year at its own cost. It will engage organizations like the National Environmental Engineering Research Institute, or any organization approved by the ministry, to ensure compliance with all the conditions; ensure that the development of the SEZ meets environmental norms; and advise on any mid-term correction that can be introduced.
The general conditions include those related to disposal of muck, testing of soil and water samples to ensure there is no contamination, disposal of hazardous waste, ambient noise levels and establishment of an environmental monitoring cell, among others.
An expert committee set up by the environment ministry, which submitted its report in April 2013, found that APSEZ had violated several environmental conditions. The five-member panel, headed by Sunita Narain, director general of the Centre for Science and Environment, said that the company had also bypassed environmental procedures in certain cases.
“The company has not taken precautions to guard against blocking of creeks because of construction activities; satellite imagery shows signs of deterioration and loss of creeks near the proposed North Port," the report had said.
The clearance issued to APSEZ on Tuesday said that any direction issued by the MoEF with respect to the report submitted by the Sunita Narain Committee shall be complied with.
The SEZ and port project have also been a target of politicians like Arvind Kejriwal, of the Aam Aadmi Party, and Congress leader Rahul Gandhi who claimed that the land had been given at throwaway prices to the Adani group when Modi was chief minister of Gujarat, alleging crony capitalism.
Adani has, in published interviews, denied charges of crony capitalism and said he had received no special favours.
“Crony capitalism should not be there. I definitely agree with that. But how you define crony capitalism is another issue," Adani was quoted as saying in an April interview with Reuters. “If you are, basically, working closely with the government, that doesn’t mean it’s crony capitalism."
The state government, Adani said, had been a facilitator. “You can say very well that land has been given to Adani," he told Reuters. “So what? Has Adani taken away land and not developed anything?"