Undue favour to Sasan Power Ltd by environment ministry, says CAG

Pointing to serious violations of green norms, an audit report by the Comptroller and Auditor General of India (CAG) on compensatory afforestation in India has said there has been “abject failure” to promote afforestation to compensate for the loss of forest lands that are diverted for industrial or other non-forest use.

An ad-hoc government body set up to manage the money received from all state governments and user agencies - the afforestation funds with this body grew from Rs 1,200 crore in 2006 to Rs 23,607 crore in 2012 - did not even prepare receipt and payment accounts, income and expenditure accounts and balance-sheets. This ad-hoc body, the Compensatory Afforestation Funds Management and Planning Authority (CAMPA) that was set up in 2006 on the orders of the Supreme Court, has also never submitted audited accounts.

Undue favour to Sasan Power Ltd

In the case of Sasan Power Ltd (SPL) in Madhya Pradesh, the CAG has found that the Ministry of Environment and Forests “inexplicably overlooked” deficiencies in a certificate, going on to exempt SPL from providing non-forest land, on the basis of an ineligible certificate issued by the Chief Secretary. The MoEF should have exercised due diligence in ensuring compliance with conditions. The result, according to the report, was non-fulfilment of conditions of additional afforestation.

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Sasan Power Ltd (SPL) is a Special Purpose Vehicle (SPV) created for the development of the Sasan Ultra Mega Power Project (UMPP). SPL was a wholly-owned subsidiary of Power Finance Corporation (PFC), later transferred to Anil Ambani’s Reliance Power Ltd (RPL) in August 2007.

[caption id=“attachment_1090829” align=“alignleft” width=“380”]  Representational image. Reuters[/caption]

In June 2007, the Government of Madhya Pradesh sought prior approval of the Centre for diversion of 320.94 hectares of forest land for construction of the UMPP (ultra mega power project) in district Sidhi. Permissions came in December 2008, subject to fulfilment of various conditions. In September 2008, the government sought approval for diversion of another 1,064.02 hectare of forest land for allocation of local blocks for coal mining for Sasan UMPP. These permissions came in November 2009, again subject to fulfilment of various conditions.

According to the CAG report, SPL should have provided an area of 1,384.96 hectares of non-forest land for compensatory afforestation. The non- forest land was to be identified, as far as possible, contiguous to or in proximity of Sidhi district. In the event that non-forest land was not available in Sidhi district, it could have been identified anywhere else in the state.

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However, in both these cases, MoEF exempted SPL from providing an equivalent area for compensatory afforestation on the basis of a certificate from the Chief Secretary that no forest land was available in Sidhi District. MoEF did not ask SPL to furnish such a certificate for all of Madhya Pradesh or to make efforts for identification of non-forest land anywhere else in the state. SPL was instead allowed to give double degraded forest land for afforestation, land that would have been much, much cheaper to acquire, even though SPL was not eligible for such an exemption.

The Deputy Conservator of Forests from the Regional Office in Bhopal even mentioned in November 2008 that compensatory afforestation on double degraded forest land was not admissible based on a certificate about non-availability of non-forest land in only one district, i.e. Sidhi.

“However, MoEF ignored his opinion and based on an ineligible certificate issued by the Chief Secretary exempted SPL from providing non-forest land in violation of the Forest (Conservation) Act 1980,” the report observed.

In addition, the MoEF had sought “additional afforestation” apart from the compensatory afforestation on equivalent land, in view of the substantial amount of good forest land being diverted. This additional afforestation was to be over an area of 991.81 + 72.21 hectares. The report says MoEF made no efforts till date to ascertain whether SPL had carried out this additional afforestation over 1,065 hectares, as stipulated.

Govt failed to collect non-forest land in order to conduct afforestation

The most critical failure, however, is the non-receipt of non-forest lands in order to undertake compensatory afforestation. This non-forest land is receivable from every agency/company/public-private project that is allotted forest land for industrial use. User agencies have to purchase/acquire this non-forest land and hand it over for afforestation.

“The ministry’s records revealed that against the receivable non-forest land of 1,03,381.91 hectares, 28,086 hectares were received during the period 2006-12 which constituted only 27 percent of receivable non-forest land,” the report says.

How much afforestation was actually carried out on received land was worse. “Compensatory afforestation done over the non-forest land received was an abysmal 7,280.84 hectares constituting seven per cent of the land which ought to have been received,” according to the report.

Seven states – Gujarat, Haryana, Kerala, Maharashtra, Meghalaya, Punjab and Rajasthan – carried out no compensatory afforestation.

Equally sorry was the record of transferring ownership to the State Forest Department. Of the 23,246.80 hectares of non-forest land received by the states’ CAMPA, only 11,294.38 hectares were transferred and mutated in the name of the State Forest Department. And of this, 3,279.31 hectares was declared as Reserve Forest/Protected Forest - just 14 percent of non-forest land received.

Land collected but no afforestation undertaken

Shockingly, in 30 out of 52 cases examined, non-forest land of 11,033.28 hectare provided by user agencies to various state governments was not declared/notified as Reserve Forest/ Protected Forest.

In the case of the Regional Office of Shillong, non-forest land measuring 5,921.03 hectares (from 10 projects) was transferred and notified by the State Revenue Department as Reserve Forests during the period 1996 to 2010 under Mizo District (Land & Revenue) Act, 1956, to Environment and Forest Department, Government of Mizoram. However, it was not declared as Reserve Forest/ Protected Forest under Section 15 to 21 of Mizoram Forest Act, 1955. Under 6th Schedule of the Constitution of India, these Reserve Forest lands were to be notified as Government Reserved Forests under Section 15 to 21 of Mizoram Forest Act, 1955.

This was pending for 15 years.

Disparities in records of MoEF and state governments

“Receipt of non-forest land is the starting point for undertaking compensatory afforestation. Yet on this critical element there was no meeting ground on the data maintained by the Ministry and State Governments,” the report says.

Variation in data on forest land diverted and non-forest land received was as much as 3.5 percent and 17.3 percent respectively between the data maintained by the regional offices of the Ministry and the State Forest Department.

“Poor quality and unreconciled data will compromise the quality of planning, operations and decision making,” it observed.

Under-use of funds, poor financial management

Of the Rs 2,925.65 crore of the compensatory afforestation funds released by ad hoc CAMPA during the period 2009-12 for compensatory afforestation activities, only Rs 1,775.84 crore was utilised by the State/UTs leaving an unutilised balance of Rs 1,149.81 crore. The percentage of overall utilisation of released funds was only 61 percent.

The CAG has also pointed out that investment of surplus funds by the ad hoc CAMPA “lacked fairness and transparency”. No comprehensive investment policy was formulated till 2012. Also, there were instances of deposits amounting to Rs 1,998.47 crore placed in banks that did not even bid. The report also points to loss of interest of nearly Rs 20 crore on account of delay in investment of fund, retaining the funds in interest-free current accounts, etc.

Other instances

The audit also observed instances where express orders of the Supreme Court were flouted by the Andhra Pradesh State Electricity Board where the diversion of forest land areound Nagarjunasagar Dam was allowed without seeking prior permission of the Supreme Court. In five other cases, unauthorised renewal of mining leases in Rajasthan and Odisha were noticed, where the approval of Central Government was not obtained by the State Government as was directed by the Supreme Court.

Numerous instances of unauthorised renewalof leases, illegal mining, continuance of mining leases despite adverse comments in the monitoring reports, projects operating without environment clearances, unauthorized change of status of forest land were also observed.