On a slip­pery slope

Na­ga­land gov­ern­ment wrests con­trol of oil re­sources from the Cen­tre; com­mu­ni­ties cry foul

Down to Earth - - COVER STORY -

CHUMTAMO KITHAN folds a towel and wraps it around his mouth and nose be­fore mak­ing his way into a dense patch of grass. The with­ered tufts of grass on the hill in his vil­lage Chang­pang in Wokha dis­trict of Na­ga­land soon give way to a vast bar­ren land, at places cov­ered with thick dry tar. Hot fumes fill the air. Eyes and skin feel the ir­ri­ta­tion. “You feel it be­fore you see it,” says Kithan as he walks care­fully, avoid­ing step­ping on the sticky soil. A few me­tres ahead, con­crete walls sur­round aban­doned oil rigs. One can hear the bub­bling sound com­ing from be­hind the walls. Kithan picks up a stick, climbs up the bound­ary wall and dips it into the crude oil leak­ing from the rig. “It has turned into a 1.5-me­tre open oil well,” he says. “Th­ese leak­ing rigs are all we have been left with fol­low­ing our his­tor­i­cal strug­gle to as­sert rights over the land and nat­u­ral re­sources.”

The strug­gle of Kithan’s tribe, Lotha, dates back to the early 1980s. With the state’s per­mis­sion, the coun­try’s multi­na­tional pub­lic sec­tor unit, Oil and Nat­u­ral Gas Cor­po­ra­tion (ongc), had just be­gun ex­tract­ing crude oil from the rigs it had sunk near Chang­pang.The area is part of Schup­pen Belt that is be­lieved to hold 600 mil­lion tonnes of crude oil and nat­u­ral gas. “ongc over-ex­tracted our oil but gave us very lit­tle share in the prof­its,” al­leges Kithan. Irked, the res­i­dents of Chang­pang and ad­join­ing Tsorri formed a union and protested against the oil gi­ant. The Chang­pang Land Own­ers’ Union (clou) ar­gued that Na­ga­land en­joys a spe­cial sta­tus un­der Ar­ti­cle 371-A of the Con­sti­tu­tion, which recog­nises cus­tom­ary rights of com­mu­ni­ties over land and its re­sources. The state can­not al­low ongc to ex­ploit the re­sources with­out their con­sent. clou de­manded that the company should sign a lease agree­ment with the vil­lage coun­cil (tra­di­tional decision-mak­ing body in a vil­lage) or Lotha hoho (the apex body of the tribe).

The Naga Stu­dents’ Fed­er­a­tion joined the protest, al­leg­ing that ongc mined 1.02 mil­lion tonnes of oil, which is much more than the amount per­mit­ted to it in the ex­plo­ration lease. ongc shut shop in 1994 fol­low­ing wide­spread protests and threats from in­sur­gent groups. “It was a wa­ter­shed event. It was a recog­ni­tion of Naga peo­ple’s rights over nat­u­ral re­sources,” says Janbemo Lotha of Green Foun­da­tion, a non-profit in Wokha dis­trict.

But the eu­pho­ria did not last long. “Ev­ery sum­mer, as the crude oil heats up at those depths, the rigs start leak­ing. With the first gush of rain, the spilled oil flows down into vil­lages,” says Kithan.The au­thor­i­ties have un­suc­cess­fully tried to con­tain the spill by con­struct­ing con­crete walls around the rigs.

In Septem­ber 2012, Peo­ple’s Sci­ence In­sti­tute, a non-profit in Dehradun, found that the ground­wa­ter of Chang­pang con­tained oil, grease, phe­nol and iron beyond the stan­dard lim­its.The oil spill is af­fect­ing the soil qual­ity and health of all liv­ing be­ings in the vil­lage, the non-profit said in its re­port. “Many peo­ple in the vil­lage now suf­fer from res­pi­ra­tory and skin prob­lems. Crop yields have also taken a hit,” says Chenithung Kithan, another res­i­dent of Chang­pang.

In 2011,a res­i­dent of Tsorri and non-profit dice Foun­da­tion in Ko­hima moved the Gauhati High Court against ongc and the state. They de­manded

1,000 crore in com­pen­sa­tion for “four decades of pol­lu­tion” caused by the oil spill. ongc hur­riedly aban­doned the es­tab­lish­ment with­out de­com­mis­sion­ing or cap­ping the rigs prop­erly, they said in the pe­ti­tion.

While the fight con­tin­ues, the state has once again al­lowed oil min­ing in the re­gion. This time around, des­per­ate to earn from its vast hy­dro­car­bon re­serves, the state has erred on the side of cau­tion.

Ploy against peo­ple

The aban­doned oil rigs had di­vided the com­mu­nity of Chang­pang into two groups: peo­ple on whose land rigs were sunk and those who were af­fected by oil spill. Ac­cord­ing to dice Foun­da­tion, in 2006 landown­ers of the rigs signed a deal with srm Ex­plo­ration Pvt Ltd, a Gur­gaon-based oil company, for tap­ping the trea­sure be­neath their land. They also ob­tained 25 years of oil and gas lease from the vil­lage coun­cil. The Lotha hoho and the Naga hoho (the apex body of all Naga tribes) op­posed the deal, say­ing oil be­longs to the en­tire com­mu­nity and not to a few in­di­vid­u­als.

Be­tween 2006 and 2007,the Cen­tre again al­lot­ted oil blocks in Na­ga­land to ongc. But the company could not pro­ceed due to com­mu­nity op­po­si­tion.

The Na­ga­land gov­ern­ment seized the op­por­tu­nity. “Some politi­cians came to our vil­lage and said we tried to trade in oil but messed it up, so now they would do it for us,”re­calls Kithan.

In 2009, the state sus­pended all ac­tiv­i­ties re­lated to oil and an­nulled pre­vi­ous ex­plo­ration and min­ing leases. It formed a Cab­i­net Sub Com­mit­tee (csc) to work out modal­i­ties for gov­ern­ing oil and nat­u­ral gas. But there was another stum­bling block. Be­fore Na­ga­land was formed in 1963, the Cen­tre had in­tro­duced the Oil Fields Reg­u­la­tion and De­vel­op­ment Act, 1948, and the Pe­tro­leum and Nat­u­ral Gas Rules, 1959, which au­tho­rised it to de­velop and reg­u­late hy­dro­car­bon re­serves across the coun­try. States hold­ing the re­serve are el­i­gi­ble for a roy­alty de­cided by the Cen­tre. Though Ar­ti­cle 371-A guar­an­tees that no Cen­tral law per­tain­ing to land and its re­sources ap­plies to Na­ga­land un­less the Assem­bly rat­i­fies it, the state gov­ern­ment did not want to take a chance. In July 2010, it passed

a res­o­lu­tion which al­lowed it to de­velop pe­tro­leum re­serves in the state, ac­quire min­eral-bear­ing ar­eas, set land com­pen­sa­tion rates and landown­ers’ share in the roy­alty and is­sue en­vi­ron­men­tal and for­est clear­ance to projects. In 2012, it in­tro­duced Na­ga­land Pe­tro­leum and Nat­u­ral Gas (npng) Reg­u­la­tions.

This made the Cen­tre jit­tery. Wor­ried that it might lose con­trol over the vast re­serve of pe­tro­leum—Na­ga­land has the po­ten­tial to in­crease In­dia’s on­shore oil pro­duc­tion po­ten­tial by 75 per cent—the then pe­tro­leum min­is­ter M Veer­appa Moily wrote let­ters to then chief min­is­ter Neiphiu Rio, op­pos­ing npng reg­u­la­tions.In June 2013, Moily, on the rec­om­men­da­tion of the Union Min­istry of Home Af­fairs, asked Rio to re­scind npng reg­u­la­tions and with­draw the no­ti­fi­ca­tion invit­ing com­pa­nies for de­vel­op­ing the re­serves.He said Ar­ti­cle 371-A does not con­fer on the Na­ga­land Assem­bly power to make laws re­lated to oil.

This is when in 2011, the then Union pe­tro­leum min­istry, re­ply­ing to a Lok Sabha ques­tion, had said that “land and its re­sources”i n Ar­ti­cle 371-A in­cludes min­er­als and oil. Speak­ing at a pub­lic meet­ing, Rio ac­cused the Cen­tre of tak­ing a U-turn on the mat­ter.

The state’s firm stand against the Cen­tre, how­ever, was not pri­mar­ily meant to ben­e­fit com­mu­ni­ties.

As per the ben­e­fit-shar­ing mech­a­nism of npng reg­u­la­tions, for ev­ery 100 of crude oil pro­duced, the company will give 16 to the state and the com­mu­ni­ties.The state will keep 50 per cent of the share, or 8, and pass on 2 to landown­ers of the rigs.The Dis­trict Plan­ning and De­vel­op­ment Board will get 2 and the re­main­ing 4 will be di­vided among the com­mu­nity.

A sec­tion of Naga com­mu­ni­ties are op­pos­ing this reg­u­la­tion. “It is sci­en­tif­i­cally wrong to give a higher roy­alty share to the landown­ers of rigs,” says Jonas Yan­than, vice-chair­per­son of the Ko­hima Lotha hoho. The rig may fall on any­body’s land but the re­serves are spread over a vast area.At the most, the landown­ers of rigs can get a land ac­cess fee. Be­sides, on what ba­sis does the gov­ern­ment claim to be the owner of oil along with peo­ple and de­mand the high­est roy­alty share, he asks. “It’s only the care­taker of what­ever lit­tle land it has ac­quired for pub­lic works,” he adds.

“It is wrong to say that the gov­ern­ment has be­come owner of oil and gas be­cause the (npng) rules clearly state that un­less the landowner (of the rig) signs the agree­ment with the se­lected company, the oil op­er­a­tions can­not take off in any dis­trict,” Chief Min­is­ter T R Zeliang told Down To Earth (see ‘State has the right to reg­u­late oil and gas’).

T Methna, for­mer pres­i­dent of Stu­dents’ Union of Konyak Tribe in Mon dis­trict al­leges that the gov­ern­ment has ma­nip­u­lated some com­mu­nity lead­ers by giv­ing them roles in the prospec­tive oil trade to ex­tract con­sent from the own­ers of land where rigs are. One rule says the gov­ern­ment “will re­quest the pres­i­dent of the Naga hoho to ob­tain con­sent of the landown­ers in writ­ing... for un­der­tak­ing the op­er­a­tions...”.

The process of award­ing con­tracts to com­pa­nies is also du­bi­ous. In­stead of invit­ing bids, the npng reg­u­la­tions as­sess a company based on its track record in Na­ga­land, its ex­pe­ri­ence and how con­ducive is its fi­nan­cial and op­er­a­tional pro­file to un­der­take oil op­er­a­tions. Fi­nal se­lec­tion is sim­ply done by a min­is­te­rial group headed by the chief min­is­ter.“No tech­ni­cal of­fi­cer is in­volved in the se­lec­tion process,” says an of­fi­cial in the state’s min­ing depart­ment, won­der­ing how the group de­cides tech­ni­cal as­pects of leases.

“While most npng rules are flawed, the state did not follow them while award­ing con­tract,”

al­leges a jour­nal­ist in Ko­hima. In Fe­bru­ary 2014, a lit­tle-known Met­ro­pol­i­tan Oil and Gas Pvt Ltd (mogpl) bagged the con­tract for de­vel­op­ing Wokha and Peren oil zones. The Union cor­po­rate af­fairs min­istry’s data shows that mogpl was floated four months be­fore Na­ga­land in­vited ap­pli­ca­tions from com­pa­nies in Jan­uary 2013. mogpl had claimed that its pro­mot­ers, Spice En­ergy, srm En­ergy and Cals Re­finer­ies—all part of one Spice En­ergy Group ac­cord­ing to the Se­cu­ri­ties and Ex­change Board of In­dia (sebi)—have ex­pe­ri­ences in oil op­er­a­tions.An in­ves­ti­ga­tion by Down To Earth (dte) re­veals a fraud­u­lent his­tory of its pro­mot­ers.

MOGPL: flawed be­fore con­ceived

To es­tab­lish its ex­pe­ri­ence, mogpl had men­tioned in its ap­pli­ca­tion that Cals, which holds 91 per cent of its eq­uity, is set­ting up an oil re­fin­ery at Hal­dia in West Ben­gal.But Cals has been mired in con­tro­versy.

In 2007,Cals is­sued 7.8 mil­lion global de­pos­i­tory re­ceipts (gdrs; sets of company shares listed and traded in a for­eign coun­try) to gen­er­ate cap­i­tal for the Hal­dia project. The gdrs, worth US $200 mil­lion, were im­me­di­ately sub­scribed by Honor Fi­nance Ltd owned by San­jay Mal­ho­tra by bor­row­ing US $200 mil­lion from a bank in Por­tu­gal. In­ci­den­tally, Mal­ho­tra was a pro­moter of Spice En­ergy Group. “This re­sulted in Cals it­self fi­nanc­ing its gdrs,” said sebi in a show-cause no­tice to the company in Septem­ber last year. This sub­scrip­tion of all gdrs of Cals through “fraud­u­lent ar­range­ment” pushed the de­mand for its shares in the In­dian stock mar­ket, said sebi. In another deal in 2009, Cals paid US $92 mil­lion to a Hong Kong-listed Asia Texx, owned by Ga­gan Ras­togi, son of Cal’s di­rec­tor and Spice Group pro­moter Deep Kumar Ras­togi ,for pur­chas­ing re­fin­ery equip­ment. While no equip­ment was de­liv­ered, Asia Texx used the money to buy back gdrs of Cals from Honor Fi­nance. Mal­ho­tra’s company then used the money to pay back its loan. Fol­low­ing the “un­fair trade prac­tices”, sebi last year banned Cals from is­su­ing eq­uity shares for eight years.

Another Spice Group company and pro­moter of Cals, srm Ex­plo­ration has also been in­dicted in the gdr forgery case.In March 2012,the Delhi High Court or­dered wind­ing up of srm Ex­plo­ration while hear­ing a pe­ti­tion by a Czech company against its fi­nan­cial deal­ings.srm Ex­plo­ration was hired by landown­ers of rigs in Chang­pang for ex­plor­ing oil in 2006.

In Septem­ber this year, Ko­hima Lotha hoho moved the Gauhati High Court against Na­ga­land for se­lect­ing mogpl.Its pe­ti­tion shows the 22 com­pa­nies that had ap­plied for the con­tract in­cluded ex­pe­ri­enced firms like Assam Company (In­dia), Prize Pe­tro­leum, Deep In­dus­tries, Shiv-Vani Oil & Gas and Ju­bi­lant Oil & Gas. mogpl has, how­ever, be­gun op­er­a­tions in Wokha in July.On Septem­ber 22,the gov­ern­ment an­nounced that mogpl will start ex­plo­rations in Peren, home dis­trict of chief min­is­ter Zeliang.

Vested in­ter­est?

In May this year, Zeliang re­placed Neiphiu Rio after the for­mer chief min­is­ter got elected as Mem­ber of Par­lia­ment. A politi­cian in the state al­leges that Zeliang could win over the support of mlas against another se­nior con­tender for the post be­cause of his in­volve­ment in the process of restart­ing oil trade. As the min­is­ter of plan­ning and co­or­di­na­tion, Zeliang had played a cru­cial role in draft­ing npng reg­u­la­tions.

Ky­ong (Lotha) Stu­dents’ Union of Wokha al­leges that the state favours mogpl. “The pro­file of an ad­viser with mogpl, Kr­ishna Kumar M B, shows that he is ad­viser to Zeliang- rong baudi, apex body of chief min­is­ter Zeliang’s com­mu­nity in Na­ga­land, Assam and Ma­nipur,” says Amos Odyuo, pres­i­dent of the union. Doc­u­ments with dte show Kumar is in the man­age­ment of mogpl. When dte con­tacted Kumar, he ad­mit­ted his as­so­ci­a­tion with Zeliang- rong baudi. “But I do not ad­vise Zeliang- rong baudi any­more be­cause peo­ple cre­ated un­nec­es­sary con­tro­ver­sies,” he said. De­fend­ing mogpl’s pro­mot­ers, Kumar said, “most com­pa­nies face such le­gal cases.”

Next, land tar­geted for oil

After oil, those in power are eye­ing oil-bear­ing land in the foothills. In March this year, the state pre­pared a vi­sion doc­u­ment to set up Na­ga­land Spe­cial De­vel­op­ment Zones (ns­dzs ) in th­ese ar­eas. An in­ter­nal con­cept note on nsdz, is­sued by the chief sec­re­tary’s of­fice to deputy dis­trict com­mis­sion­ers in Novem­ber last year, says the idea is to re­struc­ture the le­gal land ten­ure sys­tems, “that are largely tribal in na­ture,” to al­low “com­mod­i­fi­ca­tion of land as has hap­pened in all other so­ci­eties...a round the world”. At present, the state laws do not al­low non-na­tives to set­tle in the state. This ar­range­ment aims to pro­tect Na­gas from land alien­ation. Un­der nsdz, a sys­tem for “per­ma­nent set­tle­ment of non-Na­gas for in­vest­ment pur­pose” will be de­vel­oped. They will also be is­sued pat­tas (land ti­tles), ac­cord­ing to the note.

“This is a ploy to sell the oil-bear­ing land to in­dus­tries,” says a politi­cian in the state. After all, as per the npng rules, the owner of the oil-bear­ing land will get a share in the rev­enue earned from oil pro­duc­tion.The Bharatiya Janata Party-led gov­ern­ment at the Cen­tre is yet to clar­ify its stand on the mat­ter.

Chang­pang vil­lage in Na­ga­land

is part of an oil belt that is be­lieved to hold 600 mil­lion tonnes of oil and nat­u­ral gas

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