Why Adani’s mega project plans in AP are unlikely to go the Ras Al Khaimah way

Adani Group’s investments in Andhra Pradesh are the highlight of the two-day Global Investment Summit, held on March 3-4 in the coastal city of Visakhapatnam. 

Amid the disastrous fallout of the Hindenburg report and call for investigation into Adani’s investment in Andhra Pradesh by activists, the undeterred Gautam Adani-led group announced a mega investment programme for the state.

The proposed investments are spread across sectors as wide as ports, power, cement, logistics, edible oil and data centres. The Adani Group wants to partner with AP in Corporate Social Responsibility (CRS) programmes as well. There is even talk that the group is looking to acquire the public sector Vizag Steel Plant.

Widespread footprint

When placed on a map, Adani’s footprint can be seen in every district of Andhra Pradesh in one form or the other, reminiscent of the hype generated by Ras Al Khaimah (RAK) 15 years ago.

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Between 2004 and 2009, when Congress strongman YS Rajasekhara Reddy (YSR) was the Andhra Pradesh Chief Minister, Ras Al Khaimah was the buzzword.

RAK, one of the seven emirates of the UAE, was unknown in the state till then. Overnight, the tiny but wealthy emirate of the UAE acquired fame in Andhra Pradesh. YSR visited the emirate in July 2005, exactly a year after he swept to power in 2004, defeating the TDP’s Chandrababu Naidu.

In an unusual move, crown prince and deputy leader Sheikh Saud bin Saqr Al Qasimi rolled out the red carpet for him. The visit made RAKIA, the investment authority of the RAK, a major player in YSR’s development narrative.

RAKIA here, RAKIA there

RAKIA was seen everywhere. A bauxite mining project with an investment of $2 billion was planned in the thick of reserved forest in the then Visakhapatnam district. Then, RAKIA proposed to develop a financial hub and a healthcare city at a cost of ₹22,500 crore. Even 471 acres of land was also allocated to the project, known as Hyderabad Economic City (HEC).

Another massive project RAKIA was offered was the Vadarevu and Nizampatnam Ports and Industrial Corridor (VANPIC) in Prakasam district at a cost of ₹16,900 crore. The project involved the development of two ports, port corridors and a string of small ports all along the 900-km-long coastline of AP. With VANPIC, it was said, the state would become the maritime capital of India.

Investment déjà vu?

At the recent investment summit, Karan Adani, the scion of the Adani empire, laid out the road map of the group, which looks like a photocopy of RAK’s programme.

He said the group would invest about ₹20,000 crore soon in various projects in the state. The group is now operating two important ports, Krishnapatnam and Gangavaram. In the next five years, it would not only double the capacity but also transform these ports into industrial port cities.

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The group wants to develop a renewable power project with a combined capacity of 15,000 MW across five districts — Anantapur, Kurnool, Visakhapatnam and Vizianagaram. It is already working on developing a 400 MW data centre in Visakhapatnam. The group also proposes to set up cement plants in Kadapa and Nadikudi (Guntur district) with a combined capacity of 10M tonnes per annum. Karan said the Adani Group is committed to the state’s port-based development vision.

“Our footprint in the state of Andhra Pradesh is getting bigger as I speak on this occasion,” he announced proudly.

RAK dream gone sour

While the parallels are tangible, it must be recalled that Ras Al Khaimah’s plans fell apart. YSR’s government managed to get the necessary clearances, but the projects could not get enough support after his fatal helicopter crash in 2009. Subsequent Congress chief ministers did not favour them due to charges of corruption.

N Kirankumar Reddy, who was the Chief Minister between November 2010 and March 2014, cancelled the deals signed with RAK following the Opposition’s outcry and CBI investigations. The Hyderabad Economic City proposal was cancelled in 2012, as was the much talked about VANPIC deal, touted to develop AP into the maritime capital of India, in 2013.

Later, massive protests from tribal people and environment activists made the prestigious bauxite project a non-starter. In February 2007, an MoU was signed between the government of RAK and the government of Andhra Pradesh to set up an alumina plant and smelter in AP. 

Since the area falls in the ‘reserved forest’ of Visakhapatnam where no private mining is allowed, the state roped in AP Mineral Development Corporation to mine the bauxite to AnRak, the executive agency to circumvent the ban. A report by University of East Anglia research scholar Patrik Oskarsson thoroughly exposed the dark side of the MoU — official collusion and suppression of information, undervaluation of mineral wealth and huge loss to exchequer. 

This led the Union Tribal Welfare Ministry to oppose the project despite clearances by the Ministry of Environment and Forests. Union Tribal Welfare Minister Kishore Chandra Deo, who hails from the area, wrote a letter to the then governor to annul the MoU using his discretionary powers.

YSR govt in dock

The main complaint against the YSR government was why the state government had favoured private companies like Jindal South West (JSW) and RAKIA with little experience in the bauxite sector over public sector NALCO, which was also an interested party.

In his report, Oskarsson wrote: “When private companies with no previous experience in alumina or aluminium production were selected ahead of an experienced and profitable public sector company which could have operated entirely in the Scheduled Areas, the AP government was in effect choosing a more difficult solution with less potential for public income.”

The CAG also reported gross undervaluation of the ore in its 2013 report. The TDP government, which came to power in 2014, was in two minds about cancelling the project since it was the TDP government led by N Chandrababu Naidu that had first mooted the idea of bauxite mining. But the abduction of TDP leaders from the area who supported bauxite mining and the killing of one of them by Maoists finally clinched the issue. On November 16, 2015, Naidu’s cabinet resolved to put bauxite mining on hold.

Protests in forest

Adani’s Pumped Hydro storage power plant, proposed in the same forest zone that sounded the death knell for RAKIA’s bauxite project, is also facing the wrath of tribal people. The huge project will require thousands of acres of forest land which cannot be leased to the private sector as it falls in areas governed by the Fifth Schedule of the Constitution.

Thousands of people facing the threat of displacement have upped the ante against the project. An action committee has been formed by tribal people to oppose the project. Mobilisation is taking place to organise protests in the forest on the lines of the anti-bauxite agitation, said committee convenor Bonangi Chinna Padal.

“We have submitted memoranda against the project to government officials. In the next phase we will intensify our agitation, as our people did in the case of bauxite,” Padal told The Federal.

Call for probe

Meanwhile, opposition is building up against the series of decisions taken by the state government in favour of the Adani Group, including the sale of stake held by the state in the Gangavaram port.

Former Union Secretary EAS Sarma wants a thorough probe by an independent agency into all decisions taken by the state government in favour of the Adani Group.

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“The 130 acres of land allotted in Vizag to set up a data centre by Adani Group at throwaway price is objectionable. The market value of the land is about ₹4,000 crore. As per the land use policy of the state, the price of the land allotted to private agencies in the name of public purpose should not be less than 10 per cent of the market value. So, the price of the land should be ₹400 crore. But the state allotted this at a cost of a meagre ₹130 crore,” Sarma said. All Adani projects have their own share of serious complaints, according to him. 

Silent opposition

Opposition TDP is intriguingly silent on the Adani Group getting such extraordinary favours from the state government.

The political situation in the 2010s was favourable for protests against decisions taken by the YSR government: weak Congress government, mass movements, and the opposition party’s campaign against alleged corruption in the government. All these culminated in a CBI inquiry into every major decision taken by YSR in the areas of mining and ports. Ras Al Khaimah became persona non grata and was driven out.

But now, given Adani’s political clout, Chief Minister Jagan Mohan Reddy’s relationship with the Centre and weak opposition voice, despite widespread charges of irregularities by the government, it is difficult to assume that history would repeat itself in Andhra Pradesh.