Was report on SEZ reason for PAC Chairman Parrikar’s Removal?
The removal of Manohar Parrikar from the chairman post of the Public Accounts Committee (PAC) has thrown open serious questions on the credibility of the Speaker. PAC was to complete and submit its report on the SEZ scam soon in which former Chief Minister and now Speaker Pratapsingh Rane has been directly implicated. GoaChronicle.com exposes the role of the Pratapsingh Rane; former Chief Minister in the SEZ land scam…
Pratapsingh Rane – the then Chief Minister of Goa, Luizinho Faleiro – former Chief Minister and the then Minister for Industries and Alexio Sequeira – the then Minister for Power as well as director of the Goa Industrial Development Corporation; were the three ministers who intentionally favored the allotment of government lands to certain applicants, who in reality were merely real estate brokers, by circumventing certain established guidelines. By issuing letters of recommendations favoring some applicants and endorsing a decision at an illegal meeting, they have caused a loss of Rs 152 crores of rupees to the public exchequer according to former Chairman of the Public Accounts Committee Manohar Parrikar who was to submit the PAC report on the SEZ scam as well shortly.
Two former CMs, One Current Cabinet Minister
In a letter note dated 13th March 2006, Luizinho Faleiro as the Industries Minister noted: “We may direct Goa-IDC under Sec 16 read with Sec 28 of Goa, Daman & Diu IDC Act 1965, to allot the 250 acres of land at Keri to M/s Meditab Specialties Pvt to set up SEZ for pharmaceutical on their own as and where basis on the same terms.”
What is significant in this is the fact that Luizinho recommended that the land be given to the private company on the same terms as decided earlier to be given to a government corporation even though the yardstick to be used for a government undertaking and a private enterprise is different.
His note reads: “ It was proposed and decided to allot the said land to GIDC on actual cost basis for the purpose of setting up of educational institution with a simple interest of 5% on the actual expenditure incurred on the acquisition and the administrative cost till the date of handing over the possession of land.”
A little later in the note, he writes: “We may direct Goa IDC under Sec. 16 read with Sec. 28 of Goa, Daman & Diu IDC Act, 1965 to allot the 250 acres of land to ….. on the same terms i.e. actual cost basis plus 10% simple interest per annum instead of 5%.
Luizinho further states in the note that the chief minister may also see his recommendations, thereby playing it safe to share the responsibility or liability.
Pratapsingh Rane in a letter addressed directly to him by Neel Raheja – one of the promoters of the K Raheja Corporation – has endorsed a note to the MD of Goa IDC in his own handwriting saying, “Please help these people.”
In the letter K Raheja clearly states we are one of the leading developers of real estate in the country, catering to requirements of the IT, Retail and Hospitality Industry in various cities in India.
Alexio Sequeira was the director on the Goa-IDC Board and he along with Chandrakant Kavlekar, Chairman, Goa IDC, A V Parlekar, managing director, Goa IDC and Nitin Kunkolienkar, Director, Goa IDC have omitted the guidelines set by Goa – IDC.
SEZ Scam Route
In effect on account of the suspicious working of the GIDC in some cases on the instructions of the ministers in question namely the then Chief Minister of Goa Pratapsingh Rane and Minister for Industries Luizinho Faleiro including Alexio Sequeira who was the Minister for Power and a director on the GIDC Board; the Government of Goa suffered a deliberate loss Rs 86.65 crores accord.ing to the CAG report
In all seven cases where land was allotted to the SEZs land it was leased initially for a period of 30 years, renewable up to 95 years.
Two months prior to receiving the applications from the five SEZ developers who were allotted land in the Verna Industrial Estate the GIDC Board decided on 7th February 2006 to revise the premium rates of plots in all its 21 Industrial Estates ‘since there was tremendous increase in maintenance costs…’. Before this, the premium for plots in Phase IV of the Verna Industrial Estate was tentatively priced at Rs 600 per square meter. The agenda of the board meeting listed Phase IV for the said revision. The Board thereafter resolved to increase the premium rates in 18 of the 21 Industrial Estates citing that ‘…there is constraint of land and the rates in the vicinity of the estates are also quite competitive…’ However the Board did not change the premium in Phase IV of the Verna Industrial Estate. This could be construed as an irregularity when considering that the GIDC increased the premiums of all other Phases of the Verna Industrial Estate and given that Phase IV comprised of 94 per cent of the available land in the Industrial Estate. Further, after 69 per cent of the land in Phase IV had been allotted to the five SEZs, the GIDC in August 2006 revised the premium in Phase IV to Rs 750 per square meter. Incidentally the GIDC did not even state in the lease agreement that the premium of Rs 600 sqmts was tentative and open to review. The GIDC stated that given the lack of infrastructure in Phase IV the SEZ developers would have to themselves bear expenses to develop the same and therefore a lower rate should be charged.
According to the Comptroller Auditor General (CAG), the failure of the GIDC to charge the five SEZs a premium of Rs 750 per sqmts resulted in a loss of Rs 36.89 crore to the GIDC.
In case of the premiums charged to Meditab Specialities and Peninsula Pharma for land in Keri and Sancoale respectively, since these were not Industrial Estates, the GIDC used an approved formula for calculating the premiums. Using these premium rates for properties in Keri and Sancoale worked out to Rs 95.50 per sqmts and Rs 934.20 per sqmts respectively. However when executing the lease deeds in March/April 2006 the GIDC charged Meditab Specialities and Peninsula Pharma premiums of Rs 80 per sq.mts. and Rs 270 per sqmts. Once again the lack of infrastructure and ‘sloppy nature’ of the land in case of Peninsula were cited as reasons for charging lower premiums.
According to the CAG report the differential between premiums calculated using the approved formula and the premium actually charged by the GIDC to the two SEZs resulted in a loss of Rs 15.44 crore.
More importantly land in addition to that amount resolved by the GIDC Board was allotted to the five SEZ developers in Phase IV of the Verna Industrial Estate at the time the lease deeds were executed. This was done by adding open spaces and roads to the allotments. In effect 5, 38,685 sqmts of land was given away free to the four SEZs. Following the protests against the SEZs it was almost a year later in May/July 2007 that rectification lease deeds were signed whereby a premium of Rs 100 per sqmts was charged.
According to the CAG since entire contiguous areas was allotted to the four SEZs the same should have been charged Rs 750 per sqmts. The discounted rate at which 5, 38,685 sqmts of land was allotted to the SEZs resulted in a loss of Rs 34.32 crore to the GIDC.
The GIDC levies an Annual Lease Rent (ALR) from all establishments that it leases out its plots/properties to. Since 2003 the GIDC has including relevant clauses in the lease agreement which allow it to revise the ALR as and when the premium rates of the plots/properties are revised. However in case of seven SEZs this clause was not included. The result being the ALR that was fixed at the time of the agreement would not be open to revision for the entire 30 year period for which the land was leased to the SEZs. The ALR charged from the SEZs is negligible vis-à-vis the land allotted to them, and it would these rates that would remain fixed for over 30 years. The failure to include this clause would result in recurring annual losses to the GIDC.
Here is the lease per year each developer would have to pay for the next 30 years; Meditab Specialities Rs 4,92,800, Peninsula Pharma Rs 2,74,928, K. Raheja Rs 23,75,196, Paradigm Logistics Rs 7,93,257, Planetview Mercantile Rs 3,96,000, Inox Mercantile Rs 14,54,496. Making it a sum total of Rs 57,86,677
50 Per Cent Area for Malls, Multiplexes and Residential Buildings
According to the Goa SEZ Policy, 2006 SEZs were sought to be declared as industrial townships. By virtue of this the land use would automatically be changed to industrial – which is permitted a build-able area of 100 per cent Floor Area Ration (FAR). To add to this the SEZ Rules, 2006 permits that 50 per cent of the land could be used for the ‘Non-Processing Area’ in other words to be transferred for residential, leisure, entertainment, educational, business or hospital purpose. Thus by getting SEZ status the zoning of a particular property would automatically be changed to industrial wherein half of the land was permitted to be transferred for carrying out constructions in the ‘Non-Processing Area’.
After the process of allotting plots in the IT-Habitat had begun and after the notification of the SEZ policy the Government of Goa (GoG) modified the Town and Country Planning by-laws pertaining to IT/ITES and biotech buildings by increasing the permissible FAR from 100 per cent to 150 per cent.
This was done after the GIDC, in referring to a previous discussion, requested the Goa Town & Country Planning Department (TCP) to increasing the FAR to 150 per cent and also requesting ‘minimum setbacks’ for IT and biotech buildings. The TCP then replied stating that the GoG approved the same and recommended adopting the Model Building By-laws, Nov 2004 prepared by the Town & Country Planning Organization (TCPO), GoI, New Delhi through which the FAR was increased to 150 per cent and the setbacks reduced to 5 meters for IT and Biotech buildings.
Notice that most of the SEZs were proposed for IT/ITES and biotech and these would stand to benefit from the modified building by-laws. Many of the SEZs proposed to build malls, multiplexes and residential buildings in the non-processing areas of their SEZs.
What SEZ status meant was that these private owners would be able to convert the land use of their properties automatically to ‘industrial use’ and thereafter divert half of it for non-industrial constructions. In other words land which may have been designated as private forest, or agricultural/orchard could by virtue of being designated a SEZ converted to industrial, settlement and commercial purposes.
The SEZ policy also envisaged that the SEZs would be outside the jurisdiction of the bodies of local government bodies, the Village Panchayats and Municipalities. The GoG had also begun initiatives to put in place a bureaucratic structure for SEZs which was placed under the command of the Development Commissioner (DC) and thereby outside the purview of the state government.
But the most important being that the meeting of 19th April 2006 – when most of the land allotment took place – was illegal as there was no quorum. The rules clearly state that one of the Directors or Secretary appointed to the GIDC board has to be present to establish quorum. But for the 19th April 2006 meeting no director or Secretary was present and yet such important decisions were taken at this meeting which is actually null and void in the eyes of the law.