Governance Now, edit, Feb 15-18, 2011
Greenpeace India warns government against continued promotion of, and reliance on, chemical fertilizers
The remarkable success story of the “green revolution”, which turned a starving nation into a food sufficient one in a matter of years, can’t be overstated. Ironically, however, one of the key elements of that revolution – extensive use of chemical fertilizer which was subsidised by the government - now threatens to turn that very revolution on its head. In a report that should serve as the wake up call, Greenpeace India, an international environmental group, has issued a grim warning of what awaits us. It says, after studying the impact of government policies on soil health across five states that “indiscriminate chemical fertilizer usage, catalysed by a lenient subsidy policy and neglect of ecological fertilisation is posing a threat to soil health and future food security of the country”. This is an outcome of a study of the situation in five states - Assam, Orissa, Karnataka, Madhya Pradesh and Punjab.
Not that the policy makers are unaware of the situation. In fact, acknowledgement of this problem led to the nutrient-based subsidy (NBS) regime, which was introduced last year. NBS is a nutrient-centric subsidy model applicable only to three macro nutrients – nitrogen (N), phosphorous (P) and potassium (P). The Greenpeace report argues, and rightly so, that the NBS regime supports the same old chemical fertilizers, instead of addressing the issue. The answer, clearly, lies in substituting chemical fertilizers with the organic ones about which an overwhelming number of farmers are aware, the study quotes its survey in those states to assert. But the government, though claims to be promoting green manure, is actually doing precious little. The study analyses five major government schemes to show that of Rs 49,980 crore spent on promoting chemical fertilizers in 2009-10, only one-tenth, that is Rs 5,375 crore, was spent on four of the schemes that promoted organic fertilizers. Further analysis of money spent on one such scheme, Rashtriya Krishi Vikas Yojana (RKVY), shows the amount earmarked for organic farming/biofertilizer component was in the range of 2.01-2.64 percent between 2007 and 2010. “States like Punjab, which is suffering from indiscriminate chemical fertilizer usage, have not even spent a single rupee on this component (of RKVY)”, the report says, adding that “thus, we can conclude that there is hardly any support for ecological/organic fertilization”.
Fortunately, it is not too late. “The soil is in very poor health but we have not yet reached the stage where we have lost it completely. Even now farmers can reclaim their soil by shifting away from chemical fertilizers to ecological fertilisation, which will not only fix the problems in their soil but also provide sustained production”, co-author of the report Gopikrishna S R said while releasing the report. His survey shows 96 percent of farmers know that chemical fertilization leads to soil degradation and 98 percent showed willingness to switch to organic fertilizers “if these are subsidised and made easily available”. The report points out how chemical fertilizers cause depletion of water resources, salinity, hard pan formation, increased reliance on inorganic fertilizers, higher cost of cultivation, late showing of rabi crop and degradation of eco-system.
Needless to say, the course correction would require a shift in focus and the Greenpeace suggests several measures the essence of which is to generate and add large quantities of biomas in soil. These suggestions include various initiatives to promote in-situ (on farm) and ex-situ (outside farm) methods of biomas generation, supporting composting techniques, crop rotation or inter-cropping involving legumes, providing bio-fertilizers and farm-made manures and incentives to farmers to maintain proper soil health. The farmers are willing. All that is needed is institutional support, which is not such a tall order really.
Friday, February 18, 2011
The price of a Posco
Governance Now, Feb 15-28, 2011
The MoU with Orissa hands it over a bonanza of more than Rs 2,00,000 crore and a captive port to realise it
The “second” final clearance to Posco’s project in Orissa (the first one was granted on December 29, 2009), which comes attached with an astonishing 89 conditions in all - 28 old and 61 new - clearly establishes that a big corporate body can bulldoze its way through all environment and forest laws, regulations, notifications, binding guidelines and Jairam Ramesh.
Given the fact that the Orissa government is determined to set up the project at the very spot, never mind the strong opposition from the locals and gross violation of their legitimate rights, there is no stopping Posco now. The project is a virtual ‘fait accompli’ and is quite in keeping with the history of ministry of environment and forests (MoEF).
All these leave only one option for the victims and all those who believe development is meant for a greater common good, not corporate greed and that is to revisit the MoU Orissa government had signed with Posco on June 22, 2005. This has lapsed and will be renewed any time now. The intervening period provides the only window of opportunity to rectify the gross indiscretion.
A reading of the MoU throws up at least three key elements; two of which are not essential part of the project and the third spells trouble for Cuttack and nearby districts.
These are as follows:
» Proposed “export” of 400 million tonne of iron ore by Posco - which is apart from 600 million tonne it has sought by way of captive mines for producing 12 MT steel a year;
» Proposed “captive” port at the Jatadhar river-mouth and
» Proposed diversion of 10 MGD water from Cuttack’s Jobra barrage by laying 86-km-long pipeline to the project site.
Here is why these provisions require rewriting.
Export of Iron Ore: Posco provides no reason for seeking export of 400 MT iron ore other than a simple statement in the MoU saying that it is for “their existing steel plants in South Korea”. The key lies in decoding what it means for Posco.
Let us do some quick calculations. The FoB price of high-grade iron ore (Posco to get ore with 62 percent Fe content) is anywhere between $180 to $200 a tonne (that is between Rs 8,190 and Rs 9,100).
Praveen Paul, a Bangalore-based mining and bulk logistics expert, calculates that Posco will incur a cost of about Rs 2,500 a tonne – by way of extraction and beneficiation costs, royalty and permit and transportation to the port etc. Officials in the steel ministry and NMDC both say that this figure (Rs 2,500) is rather on the higher side.
Nevertheless, taking the mean FOB to be $190 (Rs 8,645) and the cost to be Rs 2,500, the net gain in exporting one tonne of iron ore works out to be Rs 6,145.
Now, assuming that Posco will be exporting 400 MT iron ore over a period of 30 years (lease period), it will be, on an average, exporting 13 MT every year.
So the net profit for exporting 13 MT of iron ore every year comes to Rs 7,988 crore. At this rate, Posco will earn, over the next 30 years, a whopping Rs 2, 39,640 crore!
That is a huge bonanza and as Paul comments, “a pure and simple gift to Posco”. Imagine, as against this, Posco promises to bring in Rs 51,000 crore for the project.
If Orissa were to export the same iron ore, it will be able to finance nearly 5 Posco plants in next 30 years.
Captive Port: Any wonder that Posco has made a “captive” port an integral part of its MoU? In fact, when the project-affected people approached the state government seeking to shift the project by a mere 3 km down south to avoid displacement of thousands, the proposal was shot down.
Priyabrata Patnaik, the state government’s nodal officer for the Posco project, told Governance Now: “The state government and Posco examined the proposal but both rejected it on technical grounds. It is not possible to shift the project because the port can’t be shifted.” It never crossed the mind of the state government that Posco does not really need a port of its own. There are at least two ports close by.
Pradip port is merely 12 km away from the proposed Posco port and has a capacity to handle 57 MT. It is in the process of adding another 59 MT by next year. A modern Dhamra port with a capacity of over 100 MT has become operational and is less than 60 km away. One more port is being proposed to be developed at Astrang, 25 km from the Posco site.
MoEF’s own expert panels too have questioned the need for the Posco port. The expert appraisal committee (EAC) raised a red flag in November 2010, pointing out the existence of both Paradip and Dhamra ports. The majority report of the MoEF expert team, headed by Meena Gupta, which submitted its report in October 2010, too brought up the same issue and had even sought revocation of clearance to the port for violating environment laws.
Way back in December 2005, minister for shipping, road transport and roadways, TR Balu, had told parliament that “the proposed minor port for Posco steel plant may lead to severe erosion along the coastline posing a threat to the port facilities at Paradip.” But the state government can’t be bothered with such trifles.
Water from Jobra Barrage: Number two of 61 additional conditions in Jairam Ramesh’s order of January 31, 2011 says: “Should there be a shortfall of water at the Jobra barrage for irrigation purposes, the company will voluntarily sacrifice water intake for facilitating irrigation.”
This is nothing short of a bad joke. For one, it admits to an existing water scarcity at Jobra barrage, which supplies drinking water to Cuttack and nearby areas, irrigation water to at least three districts - Cuttack, Jagatsinghpur and Kendrapara - and water to several industries. As it is, Jobra is unable to provide irrigation water in the lean season for the past two years. Will Posco close down its steel plant through “voluntary sacrifice”, as the order proposes, in case of the inevitable water scarcity? Highly unlikely.
It would have been, therefore, prudent to explore alternative source. The majority report of Meena Gupta committee too said that, confirming the existing water scarcity and pointing out that availability of water at Jobra was not even considered while signing the MoU. Worse, alternate sources exists - Hansua Nullah and Mahanadi’s downstream close to project site.
The conduct of the state and central governments may not inspire confidence, but this is the last opportunity to rectify what would be a monumental blunder if Orissa were to go ahead with its MoU unchanged. n
prasanna@governancenow.com
The MoU with Orissa hands it over a bonanza of more than Rs 2,00,000 crore and a captive port to realise it
The “second” final clearance to Posco’s project in Orissa (the first one was granted on December 29, 2009), which comes attached with an astonishing 89 conditions in all - 28 old and 61 new - clearly establishes that a big corporate body can bulldoze its way through all environment and forest laws, regulations, notifications, binding guidelines and Jairam Ramesh.
Given the fact that the Orissa government is determined to set up the project at the very spot, never mind the strong opposition from the locals and gross violation of their legitimate rights, there is no stopping Posco now. The project is a virtual ‘fait accompli’ and is quite in keeping with the history of ministry of environment and forests (MoEF).
All these leave only one option for the victims and all those who believe development is meant for a greater common good, not corporate greed and that is to revisit the MoU Orissa government had signed with Posco on June 22, 2005. This has lapsed and will be renewed any time now. The intervening period provides the only window of opportunity to rectify the gross indiscretion.
A reading of the MoU throws up at least three key elements; two of which are not essential part of the project and the third spells trouble for Cuttack and nearby districts.
These are as follows:
» Proposed “export” of 400 million tonne of iron ore by Posco - which is apart from 600 million tonne it has sought by way of captive mines for producing 12 MT steel a year;
» Proposed “captive” port at the Jatadhar river-mouth and
» Proposed diversion of 10 MGD water from Cuttack’s Jobra barrage by laying 86-km-long pipeline to the project site.
Here is why these provisions require rewriting.
Export of Iron Ore: Posco provides no reason for seeking export of 400 MT iron ore other than a simple statement in the MoU saying that it is for “their existing steel plants in South Korea”. The key lies in decoding what it means for Posco.
Let us do some quick calculations. The FoB price of high-grade iron ore (Posco to get ore with 62 percent Fe content) is anywhere between $180 to $200 a tonne (that is between Rs 8,190 and Rs 9,100).
Praveen Paul, a Bangalore-based mining and bulk logistics expert, calculates that Posco will incur a cost of about Rs 2,500 a tonne – by way of extraction and beneficiation costs, royalty and permit and transportation to the port etc. Officials in the steel ministry and NMDC both say that this figure (Rs 2,500) is rather on the higher side.
Nevertheless, taking the mean FOB to be $190 (Rs 8,645) and the cost to be Rs 2,500, the net gain in exporting one tonne of iron ore works out to be Rs 6,145.
Now, assuming that Posco will be exporting 400 MT iron ore over a period of 30 years (lease period), it will be, on an average, exporting 13 MT every year.
So the net profit for exporting 13 MT of iron ore every year comes to Rs 7,988 crore. At this rate, Posco will earn, over the next 30 years, a whopping Rs 2, 39,640 crore!
That is a huge bonanza and as Paul comments, “a pure and simple gift to Posco”. Imagine, as against this, Posco promises to bring in Rs 51,000 crore for the project.
If Orissa were to export the same iron ore, it will be able to finance nearly 5 Posco plants in next 30 years.
Captive Port: Any wonder that Posco has made a “captive” port an integral part of its MoU? In fact, when the project-affected people approached the state government seeking to shift the project by a mere 3 km down south to avoid displacement of thousands, the proposal was shot down.
Priyabrata Patnaik, the state government’s nodal officer for the Posco project, told Governance Now: “The state government and Posco examined the proposal but both rejected it on technical grounds. It is not possible to shift the project because the port can’t be shifted.” It never crossed the mind of the state government that Posco does not really need a port of its own. There are at least two ports close by.
Pradip port is merely 12 km away from the proposed Posco port and has a capacity to handle 57 MT. It is in the process of adding another 59 MT by next year. A modern Dhamra port with a capacity of over 100 MT has become operational and is less than 60 km away. One more port is being proposed to be developed at Astrang, 25 km from the Posco site.
MoEF’s own expert panels too have questioned the need for the Posco port. The expert appraisal committee (EAC) raised a red flag in November 2010, pointing out the existence of both Paradip and Dhamra ports. The majority report of the MoEF expert team, headed by Meena Gupta, which submitted its report in October 2010, too brought up the same issue and had even sought revocation of clearance to the port for violating environment laws.
Way back in December 2005, minister for shipping, road transport and roadways, TR Balu, had told parliament that “the proposed minor port for Posco steel plant may lead to severe erosion along the coastline posing a threat to the port facilities at Paradip.” But the state government can’t be bothered with such trifles.
Water from Jobra Barrage: Number two of 61 additional conditions in Jairam Ramesh’s order of January 31, 2011 says: “Should there be a shortfall of water at the Jobra barrage for irrigation purposes, the company will voluntarily sacrifice water intake for facilitating irrigation.”
This is nothing short of a bad joke. For one, it admits to an existing water scarcity at Jobra barrage, which supplies drinking water to Cuttack and nearby areas, irrigation water to at least three districts - Cuttack, Jagatsinghpur and Kendrapara - and water to several industries. As it is, Jobra is unable to provide irrigation water in the lean season for the past two years. Will Posco close down its steel plant through “voluntary sacrifice”, as the order proposes, in case of the inevitable water scarcity? Highly unlikely.
It would have been, therefore, prudent to explore alternative source. The majority report of Meena Gupta committee too said that, confirming the existing water scarcity and pointing out that availability of water at Jobra was not even considered while signing the MoU. Worse, alternate sources exists - Hansua Nullah and Mahanadi’s downstream close to project site.
The conduct of the state and central governments may not inspire confidence, but this is the last opportunity to rectify what would be a monumental blunder if Orissa were to go ahead with its MoU unchanged. n
prasanna@governancenow.com
Tuesday, February 1, 2011
Ramesh paves way for Posco’s Rs 11K crore bonanza
governancenow.com, feb 1, 2011
Don’t believe me? Read on
Nothing can be as absurd as the fresh environment clearance granted to the Posco project in Orissa on Monday.
Look at the order. It says:
* Environment clearance for the steel-cum-captive power plant is being given with 28 “additional conditions”;
* Environment clearance for the captive port is being given with 32 “additional conditions”;
* Diversion of forest land will be granted on the condition that the Orissa government gives “a categorical assurance” that no forest right claim exists and
* Should there be shortfall of water at Jobra barrage for irrigation, the company will voluntarily sacrifice water intake.
The “in principle” environment clearance granted to the project in September 2008 had 13 conditions attached to it. Additional 15 conditions were added to it when the “final” clearance was given in December 2009. The latest “final” clearance is the second one after Ramesh issued a stop order in August 2010.
Add up and you arrive at a list of 89 conditions (minus the water condition which is part of the set up 28)!
Ramesh needs to be asked some tough questions.
(i) What kind of “final-final” clearance is this that carries 89 pre-conditions?
(ii) Why clearance for a captive port (with 32 additional conditions) months after MoEF’s expert teams questioning Orissa government on the need for a captive port at a time when (i) Damra port has come up in the vicinity and (ii) Paradip port is being re-developed bang at the project site!
(iii) The stop order of August 2010 was issued because MoEF expert teams provided irrefutable evidence that forest rights of non-tribal traditional forest dwellers of the area had been denied. Why seek “assurance” from state government when MoEF’s “binding guideline” of 30 July 2009 which said compliance of forest right was mandatory for according clearances?
(iv) It is well known that Jobra barrage in Cuttack provides drinking water and irrigation water to Cuttack, Bhubaneswar and nearby areas. Supply of water is not adequate now. Allowing diversion of water to Posco’s project more than 100 km away will only aggravate it. So, why allow it and then put a condition of “voluntary sacrifice”? What happens when supply is short of drinking water need of Cuttack and Bhubaneswar? Will Posco plant be shut?
But more than these questions that arise out of the final-final” order of Mr Ramesh, there are a few fundamental ones that neither he nor the government (both central and state) has bothered to look into. One of those is the following:
State government’s MoU (which has, incidentally, lapsed and not renewed yet) with Posco proposes export of 400 million tonne of iron ore to its plants in South Korea. This is in addition to 600 million tonne of iron ore that the plant is seeking for producing 12 million tonne of steel annually, for which it has been prmosed captive mines.
Calculate Posco’s windfall gain by exporting 400 million tonne of iron ore which costs anywhere between Rs 3,000 to 7,000 a tonne in international market. POSCO will be paying only a nominal Rs 27 a tonne as royalty to the government. As Karnataka Lokayukta Santosh Hegde had calculated, extraction and transportation will cost will add up to around Rs 200 a tonne. Let us take total input cost is Rs 250 a tonne.
So, the windfall gain to Posco will be 400 million multiplied by Rs 2,750 (taking the price at lowest band, Rs 3,000 a tonne) and it comes to Rs 11,000 crore!
By giving the clearance Ramesh has paved the way for Rs 11,000 crore bonanza for Posco.
Posco will be investing Rs 51,000 crore, of which it will recover Rs 11,000 crore in export of iron ore alone.
The MoU does talk of "open market" arrangement for export of iron ore, but this makes little sense since Posco will be given captive mines as per the same MoU. Nothing stops Posco from sourcing the ore from its captive mines.
Don’t believe me? Read on
Nothing can be as absurd as the fresh environment clearance granted to the Posco project in Orissa on Monday.
Look at the order. It says:
* Environment clearance for the steel-cum-captive power plant is being given with 28 “additional conditions”;
* Environment clearance for the captive port is being given with 32 “additional conditions”;
* Diversion of forest land will be granted on the condition that the Orissa government gives “a categorical assurance” that no forest right claim exists and
* Should there be shortfall of water at Jobra barrage for irrigation, the company will voluntarily sacrifice water intake.
The “in principle” environment clearance granted to the project in September 2008 had 13 conditions attached to it. Additional 15 conditions were added to it when the “final” clearance was given in December 2009. The latest “final” clearance is the second one after Ramesh issued a stop order in August 2010.
Add up and you arrive at a list of 89 conditions (minus the water condition which is part of the set up 28)!
Ramesh needs to be asked some tough questions.
(i) What kind of “final-final” clearance is this that carries 89 pre-conditions?
(ii) Why clearance for a captive port (with 32 additional conditions) months after MoEF’s expert teams questioning Orissa government on the need for a captive port at a time when (i) Damra port has come up in the vicinity and (ii) Paradip port is being re-developed bang at the project site!
(iii) The stop order of August 2010 was issued because MoEF expert teams provided irrefutable evidence that forest rights of non-tribal traditional forest dwellers of the area had been denied. Why seek “assurance” from state government when MoEF’s “binding guideline” of 30 July 2009 which said compliance of forest right was mandatory for according clearances?
(iv) It is well known that Jobra barrage in Cuttack provides drinking water and irrigation water to Cuttack, Bhubaneswar and nearby areas. Supply of water is not adequate now. Allowing diversion of water to Posco’s project more than 100 km away will only aggravate it. So, why allow it and then put a condition of “voluntary sacrifice”? What happens when supply is short of drinking water need of Cuttack and Bhubaneswar? Will Posco plant be shut?
But more than these questions that arise out of the final-final” order of Mr Ramesh, there are a few fundamental ones that neither he nor the government (both central and state) has bothered to look into. One of those is the following:
State government’s MoU (which has, incidentally, lapsed and not renewed yet) with Posco proposes export of 400 million tonne of iron ore to its plants in South Korea. This is in addition to 600 million tonne of iron ore that the plant is seeking for producing 12 million tonne of steel annually, for which it has been prmosed captive mines.
Calculate Posco’s windfall gain by exporting 400 million tonne of iron ore which costs anywhere between Rs 3,000 to 7,000 a tonne in international market. POSCO will be paying only a nominal Rs 27 a tonne as royalty to the government. As Karnataka Lokayukta Santosh Hegde had calculated, extraction and transportation will cost will add up to around Rs 200 a tonne. Let us take total input cost is Rs 250 a tonne.
So, the windfall gain to Posco will be 400 million multiplied by Rs 2,750 (taking the price at lowest band, Rs 3,000 a tonne) and it comes to Rs 11,000 crore!
By giving the clearance Ramesh has paved the way for Rs 11,000 crore bonanza for Posco.
Posco will be investing Rs 51,000 crore, of which it will recover Rs 11,000 crore in export of iron ore alone.
The MoU does talk of "open market" arrangement for export of iron ore, but this makes little sense since Posco will be given captive mines as per the same MoU. Nothing stops Posco from sourcing the ore from its captive mines.
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