You could call him India’s canniest real estate investor. Or you could suggest that he was helped by those who knew he was the son-in-law of India’s most powerful politician. But whichever way to you want to see Robert Vadra, there is little doubt that he made, and is still making, his biggest killing in the deserts of Rajasthan, a state run by a Congress government under Ashok Gehlot.
Parts of this story have already been told in the media, including Firstpost. What we now bring you is the real scale of Vadra’s land holdings, and the humongous profit potential embedded in owning over 10,000 acres of land acquired for a song from unwary farmers. While his mother-in-law is trying to ensure that farmers get more than market prices, Vadra’s caper is about skimming the cream himself with inside knowledge.
Sixty percent of the state (208,110 sq km) is low-cost desert land. It is dead land with no water or habitation in sight. The cost is often as low as Rs 20,000 an acre at some places. You can’t make a killing unless you know someone would want to buy land at significantly a higher price than this.
In this desert state, Vadra picked up piece by piece of wasteland that was strategically located near power sub-stations in Bikaner and elsewhere. And from the few examples at hand, he is raking it in. A plot of 30 hectares costing Rs 4.45 lakh bought two years ago now fetches nearly Rs 2 crore!
Not only that, but in some places he is practically a monopoly seller of the land. In Kolayat, for example, Vadra calls the shots. His companies own nearly 90 percent of the wasteland there.
Through his agents and companies, he directly bought hundreds of acres of land from small and big farmers in areas with solar power potential. According to sources, Vadra owns over 10,000 acres of land in the state today.
Only the state government – and the central government – knew that land around power sub-stations would be valuable once they announced plans incentivise solar power generation. So, logically, the state should have bought land first.
It did, but it did something peculiar. The Congress government in Rajasthan acquired 50,000 hectares of land for solar plants, but bypassed the wasteland near power sub-stations during the acquisition process. Solar plants situated close to sub-stations are most economical since this means you have to invest less in grid lines to evacuate the power.
Did Gehlot’s government know that Vadra was going to buy, or did Vadra know in advance that the state government was going to announce it solar policy well in advance? Firstpost sent a mail to Vadra to get his version of things, but at the time of writing he had failed to respond.
Vadra started creating a land bank near power sub-stations from June 2009. Barely eight months later, in February 2010, the Central Government announced the Jawaharlal Nehru National Solar Mission (NSM) Policy under which huge subsidies (nearly 40 percent) were offered for setting up grid-tied solar power plants.
Almost immediately, Vadra’s land located near power sub-stations soared in value. The land bought by the state government had practically no takers because most of it was not close enough for easy grid connections. The government is now mulling developing solar parks on this land by setting up elaborate evacuation systems. It will spend a pretty penny in doing so, while Vadra is sitting on crores of profits – and potential profits.
Not one of the 23 companies which obtained licences to set up grid-connected solar power plants under NSM opted for government land! This, despite the fact that the state government offered to lease out or allot the land at 10 percent of the market rate.
Now, stuck with land that no one wants, Rajasthan Energy Minister Jitender Singh says his government will build huge solar parks on the 50,000 hectares by setting up the necessary infrastructure.
For hundreds of private developers who have registered for solar plants in Rajasthan, land near a power sub-station is the top choice. This means they don’t have to bear the cost of putting up gridlines and related infrastructure to connect to transmission sub-stations. Not only that, by setting up solar projects next to sub-stations, the investor suffers minimum loss in transmission and distribution of power.
The state government’s land policy helped Vadra make crores because its own land policy involves only leasing the land, not selling it.
“This makes things more uncertain for a developer, because the government keeps changing and so does the solar policy,’’ a private developer requesting anonymity said.
For instance, on 24 February 2009, the Rajasthan government had issued a circular making it mandatory for solar power producers to supply a certain amount of free power to the state as they were getting vast amounts of land at throwaway rates. Moreover, the government shut “open” access for solar power plants built on the allotted government land. While private solar power developers who procured land on their own were free to sell power outside the state under the “open” access system, those opting to lease government land would have got stuck in case the state did not buy their power.
This circular did not make sense, and was overturned in the new solar policy of the state government in 2011. Under this policy, a private developer can take government land, but the land acquired by the government is 20-30 km away from the grid sub-stations.
The target in the first phase of NSM is 1,000 MW of grid-connected solar power projects by 2013. Jitender Singh says: “The decks have already been cleared for 820 mw of solar power. And over 800 private solar developers have registered with us.’’
Vadra’s land is thus in huge demand for grid-tied solar projects. He is selling these `agricultural’ plots exclusively for solar plants. Since the state is promoting solar power, the rate for converting agricultural land to industrial use is lower than the normal rate prevailing in the state.