Green nod delay pinches Adani SEZ units

This in turn is breeding insecurity among workers, hampering production, expansion of approved plants

Isolated from the mainland, units within the Adani Group-promoted, Adani Ports and Special Economic Zone (APSEZ) Ltd here are feeling the pinch of pending litigation against the developer, despite the interim relief to continue operations granted by the Supreme Court.

With uncertainty looming over environment clearance to the multi-product SEZ, spread over 6,473 hectares, the units have a sense of insecurity on the crores of rupees they’ve invested here, 350 km from Ahnedabad. Their expansion plans have also hit a block, with the high court’s ban on construction and development of infrastructure here since May 2012.

The SEZ has 21 approved units. Of these,12 are operational, mostly since 2009-10, Others are at various stages of development and yet to begin commercial production. After the May 2012 HC order mentioned earlier, work on the under-construction units has not resumed. One of the major entities stuck is Alstom Bharat Forge Power, a joint venture between French energy giant Alstom and Bharat Forge.

On January 13, the HC held APSEZ had violated the environmental guidelines by allotting land to individual units in the absence of a mandatory clearance under the Environment Impact Assessment Notification, 2006. It ordered all the 12 operational unit to also close; these appealed and, on January 27, got interim relief from the Supreme Court, allowing them to continue but restraining from further construction.

The apex court also directed the Union ministry of environment and forests to comply with the HC order to decide on environmental clearance within 30 days, that is, by February 14. Besides, there is litigation pending on the allegations of mangrove destruction, encroachment and environmental degradation from the villagers of Navinal, Siracha and others in the region. The units say they should be allowed to operate, as they individually have the clearances. They are also hopeful of a positive outcome.

"We are facing hindrances despite having all clearances. We cannot exit, as we have already made huge investments both in the plant and its expansion," said a plant head of one of the chemical units in the SEZ, seeking anonymity.

On production, he said it had been heavily hit. "Because of the shutdown, the entire supply chain has been affected. Our product is approved by the client after a long process. So, if there is delay in production here, it affects the production process of our clients, too, which is not good for the business," he said.

V N Badoni, associate vice-president at Dorf Ketal Speciality Catalyst’s unit, said: “We make chemicals and cannot speed up the manufacturing process by increasing the manpower, as every chemical reaction needs time." In 2013-14, he said, their production was affected twice, first for a couple of days in February 2013 and later for a little over two weeks in January 2014.

"The shutdown order by the court in January had a big impact. We had to divert orders to units in Dadra and Nagar Haveli. We are now also under huge pressure to complete orders," he added, noting a chemical plant requires more time to restart after a complete shutdown. Their SEZ unit makes polymer-bsed chemicals, used in paints and printing inks.

Badoni also expressed concern over personnel morale. "With the court issue pending, workers are insecure about the future. There is already a problem of employee retention in Mundra; the court directions add to the woes," he said.

And, he said, expansion of the unit was stuck because of the ban on construction following the HC order of May 2012. "Machinery worth crores of rupees had been purchased with expansion in mind but we cannot proceed.” Dorf Ketal had planned to raise its production capacity from the present 600 tonnes a month to 3,000 tonnes a month. Another unit, Oriental Carbon & Chemicals, had a plane to double annual production capacity from 12,000 tonnes to 24,000 tonnes but, similarly, can’t proceed.

 

Not all units were willing to share information. Pune-based Thermax Ltd declined to comment on the issue and denied visit to its unit, which assembles large size boilers for export, within the SEZ. Though sources in the company admitted that the temporary closure of the unit had affected their operations and they had to get the boilers assembled in other units.

 

Source in the office of the Development Commissioner, Adani Ports & SEZ also agreed that the litigation against the SEZ developer was hampering the production of the units which were genuine. "Because of ban on construction and development of infrastructure since over one and half years, those units which have approval are not being able to set up units. Even the developer of SEZ is not allowed to construct units," a senior official in the Development Commissioner's office said.