Saudi Aramco plans hit by land buy woes

Saudi Aramco plans hit by land buy woes

Oil tanks seen at the Saudi Aramco headquarters during a media tour at Damam, Saudi Arabia. REUTERS

At the International Energy Forum in Delhi in April, the world’s top oil producer Saudi Aramco inked a preliminary deal to partner with a consortium of Indian players to build a $44 billion refinery and petrochemical project on India’s west coast.

The huge project was touted as a game changer for both parties - offering India steady fuel supplies and meeting Saudi Arabia’s need to secure regular buyers for its oil. Despite the obvious benefits, though, the prospects for the plan - in the works since 2015 - are growing dimmer by the day.

Thousands of farmers oppose the refinery and are refusing to surrender land, fearing it could damage a region famed for its Alphonso mangoes, vast cashew plantations and fishing hamlets that boast bountiful catches of seafood.

“We earn enough to fulfil our needs and we do not want to surrender our lands for a refinery at any cost,” says Sandesh Desai, standing amid his fruit-laden mango orchard in Nanar, a village in Ratnagiri district, some 400 km south of Mumbai.

Land acquisition has always been a contentious issue in rural India, where a majority of the population depends on farming for their livelihood. In 2008, for example, Tata Motors had to shelve plans for a car factory in West Bengal, after facing widespread protests from farmers.

And while Prime Minister Narendra Modi has tried to ease land acquisition rules to jumpstart delayed projects worth tens of billions of dollars, the government has faced resistance to amending populist laws enacted by his predecessors.

Like Desai, a majority of the farmers from 14 villages around Ratnagiri that need to be relocated for the refinery project firmly oppose the plan, a state government official told Reuters.

Opposition politicians and even a local ally of the BJP support the farmer movement, complicating matters further for the government ahead of state and general elections in 2019. The state government, which is responsible for acquiring the land for the project, has so far failed to secure even one acre of the roughly 15,000 acres needed for the refinery, Maharashtra Industries Minister Subhash Desai said.

“The state is not going to acquire land as a majority of the farmers are against the plan,” said the minister, who is a member of the Shiv Sena, which is allied with the BJP in the Maharashtra state government. Under land acquisition rules at least 70% of the land owners need to provide consent for a project, he said.

Still, some believe that the opponents are only objecting to get better compensation packages for their land.

“Eventually all stakeholders will give their consent, but it will take time,” said Ajay Singh Sengar, who heads a rival forum that supports the refinery project.

A local government official in the area said he thought many farmers would agree to a deal once a compensation package was announced.

The Ratnagiri Refinery & Petrochemicals (RRPL), which is running the project, says the 1.2-million-barrel-per-day (bpd) refinery, and an integrated petrochemical site with a capacity of 18 million tonnes per year, will help create direct and indirect employment for up to 150,000 people, with jobs that pay better than agriculture or fishing.

But farmers say they have sufficient work in their orchards and fields.

“We don’t have enough people to maintain our mango orchards. That’s why every year we employ migrant labour from Nepal,” says Arvind Samant, the secretary of a farmers’ and fishermen’s group that was created to organise opposition to the project.

Samant says instead of a refinery the government should bring agro-processing plants or other industries that suit local needs.

RRPL, a joint venture between Indian Oil Corporation (IOC), Hindustan Petroleum and Bharat Petroleum, said suggestions the refinery would hurt the environment were baseless. It says it will continue to cultivate mangoes and cashews on some 4,500 acres of land around the project.

Despite the opposition, RRPL is hopeful the project will proceed. “Some people misguided farmers and created fear. We’re now trying to answer each and every doubt,” said Anil Nagwekar, a spokesman for the RRPL, adding RRPL was struggling to convince farmers as they refused to even discuss the plan with the company.

Hundreds of people have joined non-violent protests, blocking surveyors from even measuring land needed for the site, said Omkar Prabhudesai, who heads the local group opposing the project.

Saudi Aramco declined to comment, while India’s oil ministry did not respond to a Reuters email seeking comment.

Even if the government wanted to implement the project, it would not start any land acquisition process before elections in 2019, conceded a senior state government official.

Still, some officials remain hopeful. Building a large project such as this in India was possible, but could take years, said IOC’s head of refineries Rama Gopal.