Recently, Haldia Petrochemicals Ltd, West Bengal had offered to construct a petrochemical plant in Cuddalore at an investment of around Rs 50,000 crore.
Against this backdrop, the recent statement of the Chief Minister that the eight Cauvery delta districts from Nagapattinam to Cuddalore would be declared a protected agriculture zone where setting up of new projects on hydrocarbon will not be granted permission is a bit confusing. This scheme will impede the efforts of the Centre to relax environmental impact assessment and to exempt hydrocarbon projects from public consultations that were earlier mandatory. These requirements were found to be roadblocks that delayed/stopped major investment projects.
Massive protests in the Delta region
In recent years, the State has witnessed several massive protests in the Delta region, including opposition to the coal-bed methane exploration project, the Neduvasal hydrocarbon extraction programme, ONGC’s oil exploration at Kathiramangalam, and the Vedanta group project for hydrocarbon extraction in Nagapattinam.
A few hundred farmers effectively stalled the laying of a gas pipeline connecting Kochi with Bengaluru by GAIL. The project cleared in 2010 could not be implemented despite the Supreme Court upholding the contentions of GAIL more than four years ago.
TN not a large producer of good grain
The State suffers from several disadvantages:
Highly urbanised with average land prices high.
Land holdings are highly fragmented with the average at less than two acres. This comes in the way of application of science, technology and management, essential for increasing productivity.
Average productivity is far lower than the potential.
The State is not a lead producer in any crop.
The contribution of the primary sector of agriculture is just around 8 per cent to its GDP and is falling around half the nation’s.
Huge revenue potential for oil and gas
Innovative US model that made millionaires of farmers
Improves fuel efficiency of vehicles
Planned large scale production of ethanol from corn produced in abundance and mandating an ethanol-mix with petrol
Incentivised production of shale gas
Intensified exploration and production of oil at its vast oil-rich regions of Alaska, Texas
All these were aided by a big jump in the prices of crude and natural gas backed by needed incentives to the land owners, oil explorers and producers and the concerned state governments. By intelligent sharing of the bonanza, American farmers have been extending cooperation. In less than two decades, such a focused policy has helped the US emerge with surplus in its energy needs and an exporter of oil and gas. India has invaluable lessons from the US success story. There is urgent need to step up prospecting, exploration and production, particularly for shale gas.
Focus on chemicals and petrochemicals
Like Gujarat and Maharashtra, such a focus will also witness quantum jumps in investments in industrial projects. The infrastructure is readily available at Cuddalore: for over a decade, the Nagarjuna Oil Refinery Ltd had been battling with the setting up of an oil refinery. It did not progress, came under the IBC and was closed. The rich infrastructure along with the large land area and all clearances, lend for early execution of a large petrochemical unit by HPL. Tamil Nadu can emerge a large player in a fast growing market for chemicals and petrochemicals. Presently, Gujarat meets bulk of the demand for such products with high profits. Tamil Nadu has excelled in textiles, leather, cement, automobile, auto components and IT industries. With the cyclical fortunes of these industries, diversification into chemicals and petrochemicals will contribute to greater stability for industrial growth.
TN’s share in the high growth chemical/petrochemical sector is just six per cent of the nation’s. With its long coastline and rich infrastructure, Tamil Nadu should tap the potential for the high-investment petrochemical sector.
In particular, this offers huge scope for downstream units, with large employment potential with wages much higher than in the farm sector.
This will also help the central districts of the State catch up on industrial development with the northern and western regions. There is need for a clear focus to build on the strengths of the State that has limited natural resources but an abundance of educated manpower, port facilities, good infrastructure and a strong, stable administration. In the long term perspective, it would make sense for the State to focus on the secondary and tertiary sectors, viz., industry and services. Already the State excels in these. Tamil Nadu’s record in these is exemplary. Policymakers and political leaders should work to expand on these thriving sectors and to develop agriculture as a profitable agri-business with rich inputs of science, technology and management.
Centre must consult State leadership
The Centre should have anticipated the reaction to taking decisions unilaterally on the exemption of hydrocarbon exploration projects from holding public hearings and obtaining environmental clearances. With elections to the Assembly due next year, the Centre should have factored the impact of such decisions on the AIADMK government that has been successfully weathering the threats for survival ever since the demise of the party supremo, J Jayalalithaa. It should have consulted and convinced the State leadership of the imperative for this change.
Convince on the need for gas and oil
The great enthusiasm with which oil exploration and production was focused resulted in India reaching the level of 30 per cent self-sufficiency in the 1980s. Production has been stagnating since, with no great breakthroughs in fresh discoveries and added production. Indigenous production has fallen to around 20 per cent. There is a huge increase in the outgo on imports of petroleum products at $ 111.9 billion (21.8 per cent of total imports).
The prospect for the prosperity of the land owner, the region, the State and the country, need to be marketed convincingly. There is the imperative to build consensus on such crucial issues with the states.
Depute Nitin Gadkari for building consensus
— The writer is Editor, Industrial Economist