The Land Acquisition Ultimatum: Communication Pangs and Betrayal of CSR Legacy
It was a scorching summer day and Naveen Phogat (Phogat), Manager (Security), was in the office of his senior Prem Umang (Umang), General Manager (Mining Project). “Are you kidding?” said Phogat, adding, “Do you really mean that we will publicly announce the commencement of our mining operations at Pakri- Bairat without really settling the outstanding issues?” He was breathless because he felt it was pre-mature and could escalate the situation to cause a blood-bath in the area. He was taken by surprise. Umang had anticipated such a reaction, but he knew that he had to bring his Security Manager on board for successful implementation of the project. He had already been briefed by his seniors at the corporate office: the CEO-cum-Chairman desired that a strong message of commitment towards the project must be made. He wanted Phogat to begin liasoning with Administration and Police for making necessary arrangements to keep trouble-makers at bay. However, Umang was apprehensive about his proposed plan and thought, “Should we really proceed ahead with a mining program without successful land acquisition?”
Phogat was uneasy at the prospect of a bloody confrontation that was building right under his nose. With 30 years in the Police service he knew that public protest under such provocation could deteriorate as tempers would run high and the occasion could be marred by Police firing. He realized that he was helpless in shooting down the preposterous idea as the top leadership wanted desperately to show to the Ministry of Power something concrete about land acquisition and commencement of the project. In his opinion it was a brazen act akin to disturbing a hornet’s nest. The Company had sunk about INR 300 crore till date with no concrete result in sight. The stakeholders, mainly the affected displaced population, were against the commencement of mining operations...................
Government’s Land Acquisition Policy and the Mining Industry
Since the First Five-year Plan starting from Nehru1 s era, Public Sector Companies were seen as an instrument of industrialization and a source of employment generation. Indian Government’s land acquisition policy was implemented with a heavy hand and millions of people were displaced between 1950-1990 by invoking draconian provisions such as ‘eminent domain’ or ‘public purpose’. Mining was nationalized by the government in the 1970’s. The corporate entities in mining were invested with the mandate to build self-sufficiency in the mining of coal to boost power generation...............
North Manpura Coal Mining Project
In terms of reserve and production, Indian coal industry is one among the largest in the world. The industry is dominated by Government-owned Public sector concerns such as Coal India Limited. Due to galloping demand, India has had to import coal to meet the deficit and this trend is likely to persist. Demand for thermal coal and coking coal is surging due to demand from the power and steel sectors. The current coal consumption for thermal power generation is around 600 MT.............
Rashtriya Urja Utpadan Evam Vitran Nigam: A History
The ‘Rashtriya Urja Utpadan evam Vitran Nigam’ (RUUVN) was a top Public Sector Company. It was adjudged as a great company making huge profit with a turnover of over INR 1,00,000 crore. It had diversified into hydel and non-conventional electricity generation. For the year 2011-2012, its profit before tax was INR 9223 crore (See Annexures I and II). Persistent shortage of domestic coal prevented thermal power projects from optimally utilizing their investment..............
Corporate Social Responsibility (CSR)
The company believed that it was obliged to the community because they needed a social ‘license to operate’. Since this foray into captive mining11 was their first venture and the fact that mining inherently was a disruptive activity and imposed environmental penalty, it was the moral and social responsibility of the company to compensate for the same. As a mark of this understanding the company was a signee of the “Global Compact”, an initiative of the United Nations, to launch multipronged CSR activities to mitigate the impact............
A Change in CSR Strategy
Realizing the constraint and changed nature of CSR, he had initiated the program to sponsor ITI education for the wards of those families transferring land to the company. This initiative saw relative success and helped in land acquisition to some extent. In order to strengthen the social capital of the company he identified some people in the villages willing to collaborate with the company in CSR implementation and land acquisition............
Bull in a China Shop
The affected population went on an offensive. A public hearing was held in 2006 and its timing was preponed to prevent the villagers attending it in full strength. The villagers pre-empted the move and brought their women-folk who staged a sudden violent attack on the company officials at the venue. This caught the company and administration unawares and outwitted them. Post the 2006 public hearing show-down, ingenious methods of powerful protests were organized by the then area MLA.............
The Land Acquisition Problem
The stakeholders had divided opinion about the efficacy of CSR and felt that it could not bring rapprochement unless substantive issues of dispute were addressed. These issues were related to compensation, royalty sharing, annuity enhancement, resettlement and rehabilitation (R&R) provisions, and employment guarantee scheme. The stakeholders had unrealistic expectations due to instigation by politicians, and specially the public representative who used the ‘Confrontation-Compromise-Pressure’ strategy to extract benefits.............
The Resettlement and Rehabilitation Problem
Additionally, the company failed to expedite the construction of R&R colonies for the displaced population. The issue of annuity payment to the displaced landowners was also pending approval of the state government. The failure of the state government in extending approval for the same was misconstrued by the public as unwillingness of the company to extend R&R benefits to the beneficiaries.............
The Agents of Change
Umang was an engineer with MBA from a top notch institute with considerable experience. He was a softspoken man but had a formidable reputation as a No-Nonsense Manager. Being conversant with local culture he had moved incognito in the project area and had befriended some villagers. He strengthened his informal network and used his social network to push the organization’s agenda of land acquisition. He had heard about corruption in CSR distribution of goods............
The Making of Doom’s Day
The company had become optimistic after successfully containing public violence. During the period 2011- 2012, there was no major outbreak of violence and it emboldened the top leadership to consider kickstarting mining operations. Umang had been asked whether they could proceed. Motivated by objectives like career mobility and company’s profit, Umang did not oppose the move............
Caught in the Horns of Dillemma
The project’s delay developed hardened posture of the adversaries. The failure to give assured employment, failed expectation on compensation and R&R, had eroded affiliation need of the community. Extended physical proximity developed resentment and enhanced community’s sense of vulnerability. Loss of productive territory threatened agriculture which was major livelihood for the affected population that posed biological/survival threat. There was no perceived reward value in the public-company interaction...............
Assignment Questions
I. What are the difficulties of land acquisition in India?
II. Does RUUVN’s CSR have impact on local community? Why should the company engage in CSR?
III. What is the role of RUUVN’s top leadership in the conception and implementation of CSR agenda? What was their prime motivation?
IV...............
Annexures
Annexure I: Financials of RUUVN
Annexure II: Standalone Balance Sheet of RUUVN