Vedanta UpdatePublished by MAC on 2006-06-12
12th June 2006
With the shuffling of the case against Vedanta Alumina in Orissa to the Ministry of Environment and Forests (MoEF) last February, the Supreme Court of India effectively pulled its own teeth. In September 2005 the Court's Central Empowered Committee (CEC) had unequivocally condemned the UK company's construction of its Lanjigarh alumina refinery, making it clear that mining of the adjacent bauxite-rich Nyamgiri hills was not acceptable. Instead of implementing these recommendations, the Court has referred the issues to the MoEF - which the CEC had itself identified as a culprit in the case.
(We end this update with the publication of a passionate critique of the Supreme Court's recent derelictions by a well-known civil liberties lawer who is also a member of the Court's committee on Judicial Accountability)
Since the CEC's report, Vedanta in London has been biding its time, no doubt hoping that the MoEF will rule in its favour on the refinery - if not the mine. Last week, in its provisional report for the last full year's operations, Vedanta executive chairman, Anil Agarwal admitted that the Lanjigarh plant won't come on stream in mid-June as originally hoped: the company says its trial run will probably start in August, with commercial output early next year.
The company has confirmed reports that the refinery has been importing ore from Madhya Pradesh and Chhattisgarh, and also from Gujarat. It has stockpiled over 40,000 tonnes of bauxite.
Agarwal's optimism (as expressed in Vedanta's 2005-2006 annual report) that the company will get access to bauxite from Nyamgiri now seems moderated. He claims the refinery can run at a profit even if it has to haul supplies in from outside Orissa or purchase what it can from existing mines within the state. That he has the practical capacity to do so may be doubted; that he has the money is indisputable.
According to Vedanta's provisional results for March 2005-2006, the group's revenue rose by 96.5% to $3,702 million, with an operating profit up nearly 200% (187.7%) to $944 million and current assets of $2.3 billion, with a debt gearing of under 1%. "We have already announced $3.1 billion of investments this year and Vedanta is very well positioned to realise further opportunities in India."
The company has just applied for SEZ (Special Economic Zone) status for its planned smelter, north east of Lanjigarh in Jharsaguda - a vital "third leg" of its integrated Orissa almininum project. If and when it comes on-stream the smelter will bring Vedanta's alumninum capacity to one million tonnes, ranking it (according to the company) among the ten top producers of the metal anywhere in the world. However, there is bound to be considerable opposition to the proposal: several public interest organisations in India allege that SEZs are primarily a cover for lax environmental standards, reduced worker protection, and a means of bypassing the requirements of a full public hearing.
Agarwal also seems to making progress in enlisting Orissa government support for locating his spectacular "Vedanta University" between the international tourist destinations of Puri and Konarak. The US$1 billion project is backed by a leading US consultancy with ties to the Pentagon and, according to information recently received by MAC, around 10% of places will be reserved for the sons and daughters of the wealthy and powerful within the state.
Agarwal and his associates are still trying to subdue the growing chorus of opposition to its Orissa ventures. Last month several thousand people demonstrated against the company at a meeting in the Lanjigarh district capital of Bhwanipatna. A week ago, 32 local people were arrested for carrying their opposition to the front gates of the refinery (most were released within 24 hours).
And - in a rare show of concern among UK media - two reporters from the London Sunday Times on June 4th reported accusations that the company may be linked to the unexplained deaths of three people in Lanjigarh, two of them vocal protestors against the refinery: an accusation the company has naturally denied.
Nor is Vedanta having it all its own way in the neighbouring state of Chhattisgarh. For two years Agarwal has been biting at the bit to secure the 49% of the integrated bauxite-aluminium producer, Balco, which it doesn't already own. (In fact, a 5% stake is technically reserved for Balco workers, as part of the privatisation agreement of 2001).
In 2004, the London-based minerals oligarch (Agarwal is the 28th richest man in the UK, according to the Sunday Times "Rich list" with a personal fortune of £1,680,000,000), thought he was well on the way to securing complete control of Balco. After all, P Chidambaram - a former director of Vedanta and personal friend - had just been appointed Finance Minister to the central Indian government.
Then came accusations that Balco had illegally evicted villagers from more than 1,000 acres of government land, to expand its Korba aluminium facilities and had ejected Indigenous familes on its Bodai-Daldali bauxite concession without observing their rights to adequate compensatory land..
In May this year independent government assessments of the true current value of Balco appeared to be glaringly at odds with Vedanta's offer. There were also accusations that previous estimates had been slanted in the company's favour by consultants formerly in Vedanta's employ.
So now, the Indian Attorney General has declared that he will oppose the sale.
Vedanta to start refinery trial run
Press Trust Of India
8th June 2006
Lanjigarh (Orissa) - Vedanta Resource Plc is all set to start the trial run of its Rs 4,500 crore alumina refinery project by August even though its bauxite supply was yet to be tied up.
"We are now approaching the last leg of our refinery project here. At this pace, we will be able to start trial run from August next and most probably commercial production before the end of March next," Vedanta Alumina Limited (VAL) project director Sanjeev A Zutshi said.
The VAL had already pumped in Rs 3,000 crore for this refinery project, he said, adding that only piping to major installations remained to be completed.
Listed on the London Stock Exchange, Vedanta Resource Plc is seeking to cash in on the high aluminmum price in the international market.
In October 2004, Vedanta had signed an agreement with state-run Orissa Mining Corporation (OMC) to ensure sourcing of 150 million tonne of bauxite annually as it proposed to set up one million tonne capacity refinery project at Lanjigarh in Kalahandi district.
Lanjigarh is situated in close proximity to one of finest quality baxite reserve - niyamgiri hill range.
However, the company failed to start mining as a few environmentalists and activists filed pils in court alleging that the project would destabilise bio-diversity.
After capacity addition to smelter plant at its Balco project in Chhattisgarh and rise in aluminum price, the situation compelled the company to make the move.
"We are currently importing bauxite ores from Gujarat, Madhya Pradesh and surplus ore available at Balco site. Most of the Bauxite ore would be procured from the open market," Zutshi said.
Sources in VAL said the refinery unit would start trial run of cold and hot water and spent liquour prior to the commissioning of the refinery within the next two months.
The refinery has piled up a stock over 40,000 metric tonne of bauxite lump ore. A VAL engineer said while 10,000 metric tonne of bauxite would be utilised for carpeting, the rest would go for crushing.
The ore would be thrice crushed to reduce around 80 mm lump to 1.2 mm thin chips. "The imported bauxite ore is not as qualitative as was expected from Niyamgiri hill range," Zutshi said.
Acccording to a company estimate, the Niyamgiri Bauxite ore contains around 46 per cent of alumina content while the imported ore has 39 per cent of alumina content.
Similarly, crushing and grinding of ore imported from other states would consume more energy compared to reducing the "soft" ore of the east coast bauxite ores.
"Of course, the company would not get the margin of profit by not being able to use the niyamgiri bauxite ore. The cost of production would rise as there are no proper roads to handle such a large cargo," he said, adding that the margin of loss would not be "significant".
In case Vedanta failed to get the mines, the refinery might face problems, sources said. The company, however, put up a brave face on this front.
"We are not worried over sourcing bauxite ore for our project. Even if we continue to import ore from open market, the project will not run into losses," Zutshi said.
The project director of the refinery said, "as per the agreement, the state government had committed to supply 150 million tonne of ore.
Since, the Niyamgiri hill range has an estimated reserve of 75 million tonne, it has to ensure rest 75 million tonne ore for us."
London tycoon caught up in Indian jungle mine war
Dean Nelson, Lanjigarh and Michael Gillard, Sunday Times (London)
4th June 2006
A COMPANY belonging to one of Britain's richest men is embroiled in an increasingly bitter dispute with tribesmen trying to block a new mine in a remote Indian jungle.
Vedanta Resources, owned by the billionaire Anil Agarwal, denies it is linked to the deaths of three people protesting against its £424m bauxite mine, which is being constructed on a sacred mountain in the state of Orissa.
The mountain, Niyamgiri, is worshipped by local tribes, who fear that their forest livelihoods will be destroyed by the project. The tribesmen say their land was confiscated without compensation.
Agarwal, 53, is ranked 28th in The Sunday Times Rich List with a fortune of £1.68 billion. A former scrap metal dealer, he lives in a £20m mansion in Mayfair and is set to spend £530m on building Vedanta University, an "Indian Harvard", in Orissa.
The state government is grateful for his investment, which will bring jobs and money to an area where the indigenous people have traditionally lived off the forest producing lentils, castor oil and mango paste.
Many tribespeople oppose the mining and processing scheme, however, and have clashed repeatedly with police and security guards. In the past 14 months three tribesmen, including two leaders of the campaign against the mine, have been found dead in apparently suspicious circumstances.
Sukra Majhi, a farmer from Konsari village, was run over in March last year as he was drumming up support for a rally. His widow Kadodei, 35, blames the company.
"I don't believe his death was an accident," she said. "The company told the police that he was the leader and was organising all the villagers."
Dungriya Harizan, another leading protester, died by the road last October after he had threatened to sue the company for compensation. "Someone beat him severely," his son Ravi said.
In January this year Gutu Majhi, a casual labourer at Vedanta, died after sustaining leg wounds just outside the plant. He was involved in the protest movement.
The local police chief, VSCS Rao, rejected suggestions that the three men were murdered, however. "I do not think someone has intentionally killed them," he said.
Denying that Sukra Majhi had been killed in a hit- and-run incident, Sumanth Cidambi, a director of Vedanta, said none of the men who died was known to the company as campaigners. Guards had been warned to treat the tribespeople with sensitivity, he said.
Cidambi also denied any human rights abuses and said Vedanta's compensation payments were "the best package offered by any company so far".
Vedanta had built a new housing colony, a school and health centre, Cidambi said, and of 260 families affected by the project, only 103 had been displaced. One person from each had been offered jobs, he added.
An Indian Supreme Court committee called last September for an independent inquiry into allegations of abuse by Vedanta's guards. It found that the company had misled local officials to gain permission to clear the land and it recommended that the Niyamgiri mine should be scrapped.
"Serious allegations have been made about the use of force for evacuating the tribal people from their land," the committee's report said.
Firm makes space alloy
The Telegraph (Calcutta)
30th May 2006
Raipur - Korba-based Bharat Aluminium Company Limited (Balco) has successfully produced a high grade of mixed metal, AA 7075, used in the defence and space technology equipment. The aluminium major - now owned by the London-based Vedanta group - has become the only producer of the AA 7075 grade alloy in the country.
"It was a big breakthrough for the company as other major national aluminium producers (including Hindalco) have failed to produce the alloy despite trying a number of times," said the company's chief of corporate communication, Deepak Pachpore.
The trial for producing the high-grade alloy was conducted on the demand of the Indian Space Research Organisation. Company officials said the AA 7075 grade of the alloy is in high demand across the world.
Vedanta seeks SEZ tag for Orissa unit
SURESH NAIR, Economic Times
10th May 2006
Mumbai: Vedanta Resources, the London Stock Exchange (LSE) listed metals and mining major has applied for special economic zone (SEZ) status to be granted to its Orissa based aluminium smelter project. The central government is currently examining the proposal.
If the status is granted to the project the company will be able to operate the smelter at a minimal cost and it will save a lot of cost on account of taxes. Vedanta officials confirmed that the company has applied for SEZ status for the Jharsuguda project. The company had in fact announced the project in 2005 before the SEZ policy was announced by the centre.
As the aluminium smelter project is expected largely to cater to the export market the company's decision to apply for SEZ status is aimed at taking full advantage of the SEZ policy. Vedanta is setting up the five lakh tonne per annum greenfield aluminium smelter at Jharsuguda in Orissa with a 1,215 MW power plant at an estimated cost of Rs 7,000 crore ($1.6bn). According to company officials around 40 % of the funds for the project will be generated through internal accruals while 60% would be debt funded.
Setting up of the smelter is a major step in Vedanta's corporate plan to create one million tonnes of aluminium capacity in India.
The company already has 3.5 lakh tonnes of smelting capacity at Balco and over 30,000 tonnes of aluminium smelting capacity at Malco. Both these companies are controlled by Vedanta.
The company will also rank among the top ten aluminium producers of the world if the greenfield smelter project is successful. The smelter will use alumina from the nearly Lanjigarh alumina refinery which is being set up at an estimated cost of Rs 4,500 crore and is nearing completion.
The company has also been allotted mines in the same region to mine bauxite, which will feed the refinery. The grant of mining leases has been challenged in the Supreme Court, and is currently the subject of litigation. Company officials clarified that the refinery will however not have an SEZ status.
The smelter project will be implemented in two phases over 3-5 years. The first phase will include setting up of a 2.45 lakh tonne per annum smelter with associated power facilities.
The second phase will involve a similar capacity being added taking the total smelting capacity to five lakh tonne. Setting up the five lakh tonne smelter is also part of Vedanta's larger plan to reach a million tonne capacity in each of the three non-ferrous metals, that is zinc, copper and aluminium
Govt plans 1,000 acres of land for Vedanta varsity near Konark
Pioneer News Service
Konark/Puri - Orissa Chief Secretary Subas Pani and well-known architect Hafiz Contractor were here to select a suitable plot of land for Vedanta company's proposed open university somewhere between Konark and Puri.
Sources said the Government was considering to allot 1,000 acres of land for the proposed university.
Hafiz Contractor also had a look at the environmental condition of the famous Sun Temple. Pani and Hafiz visited Chandrabhaga and Ramchandi.
At a high-level meeting at Yatri Niwas, Hafiz gave some important proposals to make Konark more attractive for tourists.
It was also decided at the meeting that 70 acres of land will be developed near Chandrabhaga for a park, a swimming pool as well as a children's entertainment park to attract more tourists.
Pani said with the completion of the Golden Triangle National Highway, Bhubaneswar, Konark, Puri, Satapada and Dhauligiri would attract more tourists. He said the Government would not allow hotel owners to construct hotels between Konark and Puri as the area comes under the Forest Department. The Government cannot afford to pollute the environment, he added.
The meeting was also attended by Tourism Secretary Ashok Tripathy, Director of Tourism Santosh Kumar Sarangi, Special Secretary of IDCO Ashok Mina and Puri District Collector Ashwini Kumar Das.
Simplex Infra bags contract from Vedanta Alumina
12th April 2006
MUMBAI: Simplex Infrastructures Ltd, a leading infrastructure and engineering company, on Monday said that it has bagged an Rs 79.28 crore contract from Vedanta Alumina Ltd for civil and structural works.
The company informed the Bombay Stock Exchange about the Rs 79.28 crore contract for civil and structural works of aluminium smelter project at Jharsuguda, Orissa. - PTI
Govt, Sterlite head for legal row over Balco sale
Akshaya Mukul & Sidhartha Times News Network
5th June 2006
NEW DELHI: Balco disinvestment is headed for the courts for a second time, but unlike 2001, government is going to argue against sale of its stake to Sterlite Industries.
The core group on disinvestment (CGD) headed by cabinet secretary BK Chaturvedi on Monday decided to play it safe and go with attorney general Milon Banerjee's opinion that the government's remaining 44% stake had been undervalued at Rs 842 crore.
The valuation has been questioned by the AG on the grounds that SBI Caps, which had been appointed by the government as the advisor for the sale, used 2004 data and there is an opinion that the market situation had changed dramatically since then given the steep rise in commodity prices.
The role of the advisors to the sale was also under scrutiny. SBI Caps had outsourced the valuation exercise to Dalal Mott McDonald, which had advised Sterlite on expansion of Balco's Korba plant.
In his opinion, Banerjee had pointed out that there was "conflict of interest" involved since Dalal Mott McDonald had advised both SBI Caps and Sterlite.
With ministry of mines gearing up for litigation, a senior official said, "Our case rests on solid ground. Conflict of interest can be easily proved in a court of law.
It is for the finance ministry to take action against SBI Caps." Officials said government could not have gone against the AG's opinion, especially after the law ministry, which had been consulted on the issue, too concurred with it.
When contacted, Sterlite director Tarun Jain did not comment on the company's future course of action saying he had not heard from the government.
In 2001, Sterlite had acquired 51% stake for a consideration of Rs 551 crore and under the shareholders agreement it is entitled to purchase additional 44%, while 5% is to be reserved for Balco employees.
Sterlite Industries - which had delivered a payment of Rs 1,098 crore to the Centre, which included Rs 256 crore interest, since the sale was to be completed in 2004 itself - had served a notice last month, threatening to go to court if the sale was not completed by June 9.
Sterlite has charged government with breach of contract since it has not followed the conditions laid down in the shareholders agreement.
As per the shareholders agreement, Sterlite could exercise its option to acquire the remaining stake. Sterlite had put in its bid in early 2004 itself on expiry of the lock-in period but the government dragged its feet, first citing the general elections and then sought two extensions on grounds that valuation was going on.
The mines ministry has also questioned the need to sell the residual stake. Sterlite has questioned the competence of the agencies involved in the sale to raise eyebrows over the valuation.
On Disinvestments Of BALCO Shares To M/s Sterlite
People's Democracy (Weekly Organ of the Communist Party of India (Marxist)) Vol. XXX No. 23
4th June 2006
THE exercise of disinvestments of the residual shares of BALCO has been put in process giving rise to serious controversy involving public interest. When the BALCO was first privatised in 2001, the issue was hotly debated in the parliament. And the issue of gross impropriety of the entire process, gross under valuation of the worth of the company while handing over 51 per cent shares to M/s Sterlite had come to light.
At that time, the parliament was assured by the then NDA government that the whole matter of BALCO disinvestments would be re-examined by the CAG. But even after five years, the report of CAG has not seen light.
Meanwhile, the exercise for disinvestments of the residual 49 per cent government shares has resumed. No one but the Attorney General of India has firmly opined that the 49 per cent government shares have been grossly undervalued and it would not be in public interest to disinvest the government shares to M/s Sterlite, as valued by SBI Cap.
The entire process of valuation of government shares in BALCO has been improper. To avoid conflict of interest, the assignment for valuation has been given to SBI Cap. The SBI Cap outsourced the job to Dalal Mott Macdonald, which had linkage with Sterlite. And this has given rise to conflict of interest between the assigned task vis-a-vis Sterlite. The valuation made by that company has been based on certain extremely flawed assumptions that the aluminium price will not increase in next five years; and BALCO, despite having invested Rs 3800 crores by March 2006, will stagnate after 2010. These impractical assumptions were made in order to keep the value of government shares in BALCO extremely low. If in this process, the government proceeds with disinvestment of its residual shares to Sterlite that will be a serious injury to the public exchequer and to the country. It is also being said that the disinvestment of residual government shares to Sterlite is obligatory on the basis of the Shareholders Agreement. But again, the Attorney General has opined clearly, that there are three other options. One is that the government retain its shares in public interest.
It may also be noted that Sterlite in any case cannot claim any advantage in terms of Shareholders Agreement because Sterlite has grossly violated the Shareholders Agreement. All the central trade unions had written jointly to prime minister on such violations by Sterlite.
Chittabrata Majumdar, general secretary of CITU and Rajya Sabha member raised the above points in his letter to the prime minister. He also requested the PM to stop disinvestments of residual government shares in BALCO and retain the same under strict supervision by the government nominees in the BALCO Board, in view of: questionable asset valuation during disinvestments in 2001, which is yet to be vetted by CAG as per assurance in parliament flagrant violation of Shareholders Agreement on labour related matters gross under valuation of residual 49 per cent shares by SBI Caps through an agency M/s Dalal Mott Macdonald which has a conflict of interest vis-a-vis M/s Sterlite and Attorney Generals opinion on under valuation of shares and governments right to retain residual shares. .
Tapan Sen, secretary, CITU and Rajya Sabha member also raised these issues in his intervention in the House and urged the government to refrain from offloading the residual shares of BALCO to Sterlite in greater public interest.
No decision on selling shares in BALCO: FM
Press Trust India,
22nd May 2006
(New Delhi): Finance Minister P Chidambaram has said that no decision has been taken to sell 49 per cent residual shares of Government in aluminium major BALCO.
"No decision has been taken by the Committee of Secretaries or the Ministry of Mines. The Government knows and the Prime Minister knows (about developments). The final decision will have to be taken by CCEA," he said.
He said the Mines Ministry, after taking legal advice, took a decision that government shares in BALCO must be valued again after every successful valuer was disqualified.
A Committee of Secretaries was then set up to look into the matter, the Minister said.
He pointed out the decision on BALCO sell-off was taken by the then NDA Government as the agreement contained a provision for purchase of residual shares by the majority stakeholder Sterlite Industries. (PTI)
Sterlite sends legal notice to govt on Balco pact
TIMES NEWS NETWORK
13th May 2006
NEW DELHI: Seeking to acquire the residual 49% stake in Balco, Sterlite group has sent a legal notice to the government, alleging a "breach of shareholders' agreement".
The notice follows the payment of Rs 1,098 crore by Sterlite to acquire the remaining stake in the company. Sterlite had earlier bought a majority stake in the erstwhile public sector unit for Rs 551 crore in '01. According to agency reports, the group's director (finance) Tarun Jain has, however, said they would not comment on any developments regarding Balco.
However, there are reservation within the government, with the committee of secretaries considering the attorney general's advice to not sell the 49% stake in Balco at a price which Sterlite was willing to pay.
According to the shareholders' agreement signed when Sterlite bought Balco, the Anil Agarwal-controlled company was given the option to buy the remaining stake by '04. As the process could not be completed before '04 due to procedural delays, the attorney general advised the government to either renegotiate the value of the 49% stake or sell it to public. The attorney general also said that the government has an option of not selling its stake in Balco at all.
As Agarwal sits quietly...
9th May 2006
Sterlite's chief Anil Agarwal has been sitting quietly as the controversy about BALCO's valuation has been hitting media headlines but now sources close to him have started speaking out.
According to the Shareholders Agreement Sterlite had the first right to the government's stake.
Anytime that Sterlite would exercise that purchase option, the government would get 30 days to complete the valuation of its stake and another 30 days to complete the sale.
And Sterlite would have to pay a 14 per cent interest for that entire 60-day period.
Sterlite exercised its call option in March 2004 and according to the share holders agreement the government should have sold its stake within the next two months.
But the valuation report was only published in March 2006 two years after Sterlite wanted to buy out the government's stake.
BALCO's valuation took this long because all five valuers that had been decided on initially had to be disqualified and a new valuer had to be found".
The Attorney General says the valuers were disqualified because each of them had been employed by Sterlite at one time or the other so Sterlite is to blame for the delay.
Sources close to Sterlite on the other hand say it's the government which caused the delay by requesting for nine extensions between April 2004 and December 2005..
The AG says since Sterlite caused the delays it should pay interest at 14 per cent for the entire period of two years.
Sterlite on the other hand says it is legally bound to pay interest for just 60 days.
Sources close to Sterlite insist that despite the dispute over how much interest should be paid, they have already sent a cheque to the government for a sum of Rs 1098 crore - an amount that includes interest for two years.
The interest amount is subject to arbitration and Sterlite can claim it back in the future.
But there's more to the BALCO valuation drama than just a difference over interest payment.
The Attorney General has raised questions about the valuation done by SBI Caps saying it seems to be far too low at a time when aluminium prices are rising.
But sources close to Sterlite say similar questions had been raised about the valuation process when BALCO was first disinvested and the Supreme Court had give a clean chit to the sale at that time.
The AG's doubts have forced the valuation issue into the hands of the Cabinet Committee on Economic Affairs or CCEA.
But Sterlite argues the CCEA cannot be the right forum for BALCO's valuation especially since it has already been done by a professional valuer like SBI Caps.
Anil Agarwal has not only spent a lot of sweat and tears over BALCO, but Sterlite has also invested about Rs 4000 crore on the company.
Sources close to him say the money was spent in good faith because the government had assured Sterlite it will divest its entire stake.
But unfortunately for the Sterlite chief there's been a regime change since he first entered BALCO and the political winds seem to have turned against him.
Sterlite cheque for Balco stumps govt
JAYANTA ROY CHOWDHURY
14th April 2006
New Delhi: In a surprise move, Sterlite Industries Ltd has sent a cheque for Rs 1,098.89 crore to the Union government for the transfer of the latters remaining 49 per cent stake in Bharat Aluminium Company Ltd.
The move has forced the government to call a meeting of the core group on disinvestment, to be followed by a meeting of the Cabinet Committee on Economic Affairs.
The cheque drawn in favour of the department of economic affairs, ministry of finance, was sent to the secretary of mines along with a covering letter.
The move comes in the midst of a raging controversy within the government over the price at which the rump shares were to be sold to Sterlite and whether there was at all any need for the government to sell the shares.
A note sent by the ministry of mines to the finance ministry and other ministries concerned, says the immediate cause and intent of the strategic partner (Sterlite), behind sending the letter and the cheque is not clear. The cheque amount has been determined on the basis of a reference price of Rs 101.65 a share set by SBI Caps, though Sterlite's letter to the government says the final price will be settled through arbitration.
A few years back, Sterlite had picked up a 51 per cent stake in Balco for just Rs 550 crore. The sale itself and the price at which the state-run aluminium major was sold created a furore in Parliament. Since then, Sterlite Industries had been taken over by Vedanta Plc, a London-based metal firm. A meeting of the core group on disinvestment held earlier this year sought the law ministrys opinion on whether Sterlites intention to buy Balco shares was still valid as 24 months had lapsed since the cut-off date.
A note for the upcoming core group meeting says that law firm Amarchand Mangaldas has given an opinion that the valuation could be considered flawed if there is an apparent illegality, bias or partiality. It also points out that minister of mines Sis Ram Ola has received references which claimed the valuation was too low, especially as Sterlite was quoting on the bourses at Rs 1,400 a share recently. It adds the references contend that Balco stock as such should not cost less than Rs 1,000 a share.
Earlier too, the government had been in a bother over the rump share sale issue after officials pointed out that Sterlite's management structure itself has changed since it bought Balco when the NDA was in power.
Sterlite sold majority holding to London-based Vedanta, two years ago. However, the government ultimately accepted Sterlite's contention that there has been no real change in ownership as Vedanta too is owned by the Agarwal family which owns Sterlite.
BALCO stake sale: Govt to maximise gains
Press Trust India
13th March 2006
The government has said it will sell its remaining stake in Bharat Aluminium Company (BALCO) at a price higher than fair value and unit sale price to maximize the returns.
"The action of valuation of shares has been initiated in accordance with the provisions of shareholders agreement and prescribed procedures. The shares are to be sold at a price which is higher than fair value and unit sale price," said Minister for Mines T Subbarami Reddy.
He said that SBI Capital Markets was appointed as independent valuer on December 26 2005 to determine the fair value of 49 per cent stake. The valuation report was submitted on January 23.
Reddy said the last dividend cheque it received from BALCO was for 2003-04 of Rs 5.4 crore while the turnover and gross profit of the company had been increasing consistently since its privatisation.
In a reply to another question, he said that the Government got three proposals from Indian subsidiaries of foreign companies for mining leases.
Transworld Garnet India Pvt Ltd, Indian subsidiary of Canadian company, has made two proposals for mining Garnet in Andhra Pradesh.
Geo Mysore Services, promoted by an Australian company, has also submitted a proposal for mining gold, copper, lead, zinc, silver and all other associated minerals in Andhra Pradesh. (PTI)
Once respected around the world as an independent and forthright final arbiter, the Supreme Court's recent failures to implement decisions on the Narmada dam, and rights of pavement dwellers, indicates that it is "spearheading a massive assault on the poor" according to a well known civil liberties lawyer.
THE ASSAULT ON THE POOR
BY PRASHANT BHUSHAN
New Delhi - There was a time, not so long ago, when the Supreme Court of India waxed eloquent about the Fundamental right to life and liberty guaranteed by Article 21 of the Constitution to include all that it takes to lead a decent and dignified life. They thus held that the right to life includes the right to food, the right to employment and the right to shelter: in other words, the right to all the basic necessities of life. That was in the roaring 80's when the Court gave a series of path breaking judgements; Olga Tellis (where it held that even pavement dwellers have the right to resettlement and a right of hearing before they are evicted); the Asiad Workers case, where it held that non payment of minimum wages to the workers violated their right to life; the Bandhua Mukti Morcha case, where it was held that workers cannot be kept in bondage because of loans they had taken from their employers; in Vishaka where while giving a liberal interpretation to sexual harassment of women in the workplace, they held that international covenants signed by India can be read into domestic law. A new tool of Public Interest Litigation was fashioned where anyone could invoke the jurisdiction of the Courts even by writing a post card on behalf of the poor and disadvantaged who were too weak to approach the courts themselves. It seemed that a new era was dawning and that the courts were emerging as a new liberal instrument within the State to provide the poor some respite from the various excesses and assaults of the executive.
Alas, all that seems a distant dream now, given the recent role of the courts in not just failing to protect the rights of the poor that they had themselves declared not long ago, but in fact spearheading the massive assault on the poor, particularly since the era of economic liberalization. This is happening in case after case, whether they are of the tribal oustees of the Narmada Dam, or the urban slum dwellers whose homes are being ruthlessly bulldozed without notice and without rehabilitation, on the orders of the court, or the urban hawkers and rickshaw pullers of Delhi and Mumbai who have been ordered to be removed from the streets again on the orders of the court. Public Interest Litigation has been turned on its head. Instead of being used to protect the rights of the poor, it is now being used by commercial interests and the upper middle classes to launch a massive assault on the poor, in the drive to take over urban spaces and even rural land occupied by the poor, for commercial development. While the lands of the rural poor are being compulsorily taken over for commercial real estate development for the wealthy, the urban poor are being evicted from the public land that they have been occupying for decades for commercial development by big builders, for shopping malls and housing for the rich. Roadside hawkers are being evicted on the orders of the Courts (which will ensure that people will shop only in these shopping malls). All this is being done, not only in violation of the rights of the poor declared by the Courts, but also in violation of the policies for slum dwellers and hawkers which have been formulated by the governments. Sometimes these actions of the Court seem to have the tacit and covert approval of the government (and the court is being used to do what a democratically accountable government cannot or dare not do), but occasionally they are against the will of the government. Let us examine a few of these cases.
In the main judgement of the Narmada Bachao Andolan case on the Sardar Sarovar Dam, the majority judges in the Supreme Court ruled in October 2000, that the project need not be reviewed, despite Justice Bharucha holding that a cost benefit analysis of the project had never been done, since even the Environmental impact studies had not been done. While giving the go ahead for the project, the majority judges justified it by saying that the Narmada Water Disputes tribunal's award had given a very humane and generous land based rehabilitation package for the oustees of the project which must be implemented, and which will ensure that the oustees will be better off after their displacement and rehabilitation. They also ruled that the award which mandated that rehabilitation must precede submergence and displacement must be adhered to at all costs.
In 2002 however, the NBA went to court again against the permission to raise the height of the dam to 100 metres, when it was clear from the government's own records and reports that the oustees to be submerged at that level had not been rehabilitated. The court first adjourned the matter because of a difference of opinion between the judges hearing the case, and finally, Justice Kirpal, who had written the majority judgement in 2000, dismissed it by saying that NBA could not approach the court on behalf of the oustees, who had to come on their own and after first ventilating their grievance before the Grievance Redressal Authorities. The whole basis of Public Interest Litigation developed over the last 25 years, which allowed any public spirited person to approach the court on behalf of persons too weak to approach the courts themselves, was casually set at naught for these Narmada oustees. And of course the construction and submergence went on without rehabilitation.
In 2004, when permission was given to construct the Dam to 110 metres, some of the affected oustees from 2 villages approached the Apex court again after having gone through the motions of having first approached the geriatric and moribund Grievance Redressal Authority of M.P., who would either keep their grievances pending or dispose them off on the basis of the claims of the authorities, without bothering to get a field verification done. Two of the grievances of these oustees were, that the authorities and the GRA were not offering rehabilitation to the major sons of oustees and to those whose lands and houses would be temporarily submerged during the monsoon. The court finally ruled in 2005 that the temporarily affected oustees as well as the major sons were entitled for rehabilitation. Again however the construction was allowed to go on, resulting in the lands and homes of thousands of families getting submerged without rehabilitation.
In March 2006, the Narmada Control authority gave permission for raising the height of the Dam to 122 metres, which would result in the submergence of another 15 thousand additional families. This, when M.P. had not offered cultivable agricultural land to virtually anyone, and none of their rehabilitation sites were ready with the infrastructure of roads, water supply, electricity, and sanitation. It took more than a month long agitation and an indefinite fast by Medha Patkar for the Prime Minister to send a team of 3 Ministers to the valley to verify the facts. The team made a hurried visit to 7-8 rehabilitation and submergence sites and gave a scathing report pointing out that virtually none of the oustees had been resettled and none of the rehabilitation sites were even ready to house the oustees. In the Narmada review committee, consisting of the Chief Ministers of the 4 states and Union Ministers of Water resources and environment, there was a split on party lines, with the BJP CMs voting to continue construction and the 3 UPA members voting to stop it. The matter was referred to the PM who had been designated by the Supreme Court as the final authority in such a situation. Manmohan Singh however preferred to duck his responsibility and passed the buck to the Supreme Court which was due to hear a petition by the affected oustees a few days later.
The Supreme Court, which was originally due to hear the matter on the 3rd April, had earlier postponed it to the 17th, citing the non availability of the bench to hear the matter. This, despite being told that the ongoing construction would submerge an additional 150 families by every day of construction. On the 17th April, the report of the Group of Ministers which had reported the gross and total failure of rehabilitation, was placed before the Court. The Court again adjourned the case by 2 weeks, giving the States more time to reply to the applications of the oustees and the report of the Ministers. Meanwhile the construction was allowed to go on, though the court stated that they would be forced to stop the construction if it was found that rehabilitation had not been completed in letter and spirit of the award.
On the 1st May, the Court heard detailed arguments after the counter affidavits of the States had been filed. On behalf of the oustees it was pointed out that it was the admitted position that virtually no oustee had been provided land for land. More than 90%of those entitled for land had been given only cash compensation. And more than 90% of these had been so far given only half of their cash entitlement with which they could not even buy half hectare of land despite being entitled for 2 hectares. The Award mandated that rehabilitation had to be completed a year before submergence. It was also admitted by M.P. in its affidavit that many rehabilitation sites meant for these oustees were incomplete and lacked basic infrastructure. It was also pointed out to the court, that Gujarat's claim that the additional height of the Dam was necessary for providing additional water to the drought prone regions of Gujarat was bogus, since Gujarat was being able to use only 10% of the water already available from the existing height of Sardar Sarovar on account of the hopelessly incomplete canals and water pipelines.
The court first adjourned the case further to May 8, and then observed that since facts were disputed, they would like to have the report of the 3 member committee, formed by the PM, headed by the former CAG, V.N. Shunglu. This committee is supposed to give a report on the state of resettlement of the oustees to the PM by the end of June. The court therefore adjourned the matter to the 10th of July, after which they would decide whether the construction of the Dam was legal or not. Meanwhile the construction would continue and be completed by the end of June. In other words, after the Dam was completed and the oustees submerged, the court would decide whether the construction was legal or not! This, after the admission by M.P. that many of their rehabilitation sites were not ready, and after the scathing report of the Group of Ministers. The court's behaviour in first refusing to hear the matter, then repeatedly adjourning it, then allowing the construction to be completed on the specious ground that they needed the report of the Shunglu Committee, clearly demonstrated a total lack of sensitivity to the oustees and the complete subordination of their rights to the commercial interests of those industrialists led by Narendra Modi who are eyeing the Narmada waters for their industries, water parks and golf courses. The gap between the rhetoric and the actions of the Court could not be more yawning.
Meanwhile, as the Narmada oustees were being submerged without rehabilitation, a massive programme of urban displacement of slum dwellers without rehabilitation was being carried out in Delhi and Bombay, also on the orders of the High Courts. Sometimes on the applications of upper middle class colonies, sometimes on their own, the Courts have been issuing a spate of orders for clearing slums by bulldozing the jhuggis on them, on the ground that they are on public land. Some of this is being done with the tacit approval of the government, such as the slums on the banks of the Yamuna which are being cleared for making way for the constructions for the Commonwealth games. But elsewhere the demolitions are being ordered despite the government saying that the slum dwellers are entitled for rehabilitation on the governments own policy and that right now they do not have the land to rehabilitate them. Instead of stopping the demolitions in such circumstances, the Delhi High Court has ordered the demolitions to continue regardless. And all this, without even issuing notices to the slum dwellers, in violation of the principles of natural justice.
The matter was taken to the Supreme Court, where it was pointed out that the High Court's orders were in violation of at least two rights of the slum dwellers, which had been reiterated by the courts in a series of judgements of the eighties and nineties, starting with the pavement dwellers case of Bombay in 1984, where the Apex Court had held that poor persons occupying public pavements had a right to be heard before eviction and if they had been there for a considerable time, they had a right to be given alternative places, prior to their eviction. However, ignoring the jurisprudence developed over 2 decades by it, the Court dismissed the petitions and orally observed that nobody asked these persons to come to Delhi, if they could not afford housing here, and that they have no right to occupy public land.
This was not all. The Court's relentless assaults on the poor continued with the Supreme Court ordering the eviction of Hawkers from the streets of Bombay and Delhi. Again, turning their backs on Constitution bench judgements of the Court that Hawkers have a fundamental right to hawk on the streets, which could however be regulated, the Court now observed that streets exist primarily for traffic. They thus ordered the Municipality and the police to remove the "unlicenced hawkers" from the streets of Delhi. All this again without any notice or hearing to the hawkers. This effectively meant that almost all the more than 1.5 lakh hawkers would be placed at the mercy of the authorities, since less than 3 percent had been given licences.
More recently, the Delhi High Court has ordered the removal of rickshaws from the Chandni Chowk area, ostensively to pave the way for CNG buses. This order will not only deprive tens of thousands of rickshaw pullers of a harmless and environmentally friendly source of livelihood, it will also cause enormous inconvenience to tens of thousands of commuters who use that mode of transport.
The country today is living through a phase where the country's billionaires are growing as rapidly as farmers suicides in the countryside; where opulent shopping malls, commercial complexes and futuristic IT cities are coming up on land which the poor are being forced to vacate. Thus the poor are being deprived of the only real resources that they have, land, and are being made homeless and destitute in order to feed the greed of the wealthy. All this is being accomplished with the help of the courts, with the courts often leading the assault. This has bred and is continuing to breed enormous resentment among the poor and the destitute. Feeling helpless and abandoned, nay violated, by every organ of the State, particularly the judiciary, many are committing suicides, but some are taking to violence. That explains the growing cadres of the Maoists who now control many districts and even States like Chhatisgarh. The government and the ruling establishment thinks that they can deal with this menace by stongarm military methods. That explains why the government relies more and more on the advice of former policemen and why there is talk of using the Army and Air Force against the Maoists. Tribals in Chhattisgarh are being forced to join a mercenary army funded by the State by the name of Salva Judum to fight the Maoists. But all this will breed more Maoists. No insurrection bred out of desperation can be quelled by strongarm tactics. The very tactics breed more misery and desperation and will push more people to the Maoists.
Unless urgent steps are taken to correct the course that the elite establishment of this country is embarked upon, we will soon have an insurgency on our hands which will be impossible to control. Then, when the history of the country's descent towards violence and chaos is written, the judiciary of the country can claim pride of place among those who speeded up this process.