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Wrong classification of forest land caused Rs 58.64 cr benefit to Adani company: CAG report

The issue pertains to two pieces of forest land measuring 1,840 hectare and 168.42 hectare in Mundra and Dhrub.

By: Express News Service | Gandhinagar | Published: April 2, 2015 4:13:36 am
CAG had reported the matter to the government in May 2014, though its reply was awaited by the CAG. CAG had reported the matter to the government in May 2014, though its reply was awaited by the CAG.

The Comptroller & Auditor General of India (CAG), in its report tabled in Gujarat Assembly on Tuesday, has found that incorrect classification of forest land in Kutch by the Gujarat government led to undue financial benefit to the tune of Rs 58.64 crore to Gautam Adani-promoted Mundra Port and Special Economic Zone Limited (MPSEZL) in 2008-09. CAG had reported the matter to the government in May 2014, though its reply was awaited by the CAG.

The issue pertains to two pieces of forest land measuring 1,840 hectare and 168.42 hectare in Mundra and Dhrub villages of Kutch district, respectively. As per details, the Union Ministry of Environment and Forests (MoEF) had, based on a July 1999 proposal from the Forests and Environment Department of Government of Gujarat (GoG), granted in-principle approval for diversion of the two pieces  of land to Adani Chemicals Limited (ACL) for setting up a solar salt project and salt washery in May 2004.

The ACL, however, CAG reports, “…sought (September 2007) the permission of the MoEF through the GoG for using the forest land to develop a terminal and solid bulk cargo handling facilities at Mundra port in the name of MPSEZL on the plea of changing business environment and opportunities.” While the decision of MoEF in this regard was awaited, on March 28, 2008, the Supreme Court in its judgment classified forests of India into six ecological classes and fixed rates of the net present value (NPV) to be recovered from any user agency for diversion of forest land for non-forest purposes.

“Accordingly, the GoG also notified (September 2008) NPV rates based on the ecological classes and density of forests of Gujarat. The forests of district Kutch fall under two categories i.e (I) Eco-class-II — Littoral and Swamp Forests and (ii) Eco-Class-IV-Tropical and Thorny Forests. The rates of NPV for open forests land having density of less than 40 per cent under Eco-Class-II and Eco-Class-IV are Rs 7.30 lakh per ha and Rs 4.38 lakh per ha respectively,” CAG records. Following this, in January 2009, the GoG submitted a fresh proposal seeking the approval of MoEF for the diversion of previously earmarked forest land of 1,840 ha and 168.42 ha for development of a port-based SEZ instead of a solar salt project and salt washery. The MoEF also, in February 2009, granted in-principle approval.

Subsequently, the Deputy Conservator of Forests (DCF) of Kutch — in July 2009 — recovered NPV of Rs 87.97 core from the Adani company at Rs 4.38 lakh per ha (as applicable for Eco-Class-IV forest land) on the total 2,008.42 ha of forest land. CAG reports, “We observed (November 2012) that the Conservator of Forests, Bhuj, in his Inspection Report (December 2008) had stated that the site of the diverted forest land was an outer area of the sea and the creeks were full of mangrove vegetation.”

CAG has reported that the forest land given to MPSEZL for use by GoG falls under Eco-Class-II Littoral and Swamp Forests. “Therefore, diverted forest land should have been classified as Eco-Class-II, for which NPV was of Rs 7.30 lakh per ha. Thus, the incorrect classification of forest land under Eco-Class-IV instead of Eco-Class-II resulted in short recovery of NPV of Rs 58.64 crore from the user agency (Adani company).” Justifying the classification, the Principal Conservator of Forests told CAG that though the diverted forest land was situated at the western coast of Arabian Sea and the creeks had mangrove vegetation, the area diverted to the user agency (MPSEZL) was exclusive of creeks. He added that the diverted forest land was categoriesed as Eco-Class-IV having poor vegetation.

However, CAG has negated the answer in its report. “The reply is not convincing as the diverted forest land was being flooded with sea water during high tide and as such should have been classified as Eco-Class-II having littoral and swamp forest,” it said.

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