Wednesday, May 22, 2024

Sarma writes another letter to Delhi

  • Urges Union Finance Minister Sitharaman to desist from disinvestment in VSP
  • Expresses shock at the singing of MOU between RINL and South Korean company behind the back of AP government, RNIL employees and the people

Visakhapatnam: Former secretary to Government of India, EAS Sarma, IAS, has written yet another letter, this time to Union Finance Minister Nirmala Sitharaman, pleading to desist from disinvestment in  Rastriya Ispat Nigam (RINL) – Vizag Steel Plant. He had written a strong  letter to Prime Minister Narendra Modi the other day (26 February 2021) urging him to drop the plan to privatise the plant. He had narrated the history of the long-drawn struggle by the people of united Andhra Pradesh and the sacrifices they made  for the steel plant to be located in Vizag. Referring to the letter he had written to the prime minister, Sarma expressed his shock and anguish at the reply given by the Union Minister on 10 February 2021 in Rajya Sabha to an unstarred question saying that RINL and POSCO had signed an MOU for jointly setting up a steel plant at the site of RINL. He expressed surprise that such an MOU was signed at the back of AP government, the employees of RINL and the people of Andhra Pradesh. He questioned the role of the South Korean company Hyundai which was not mentioned in the MOU.

Also Read : Sarma asks PM not to disinvest in VSP

Here is the full text of Sarma’s letter to the union finance minister:

Dear Smt Sitharaman,

Kindly refer to the enclosed letter dated 26-2-2021 addressed by me to the Prime Minister questioning the unilateral decision of the Centre to privatise RINL’s Visakhapatnam Steel Plant. The concerns raised by me in that letter are of a serious nature.

Meanwhile, we, the citizens of north Andhra Pradesh, were taken aback at a reply given by the Union Steel Minister on 10-2-2021 (copy enclosed) in response to an Unstarred Question in the Rajya Sabha that RINL and POSCO had signed an MOU for jointly setting up a steel plant at the site of RINL here. I have extracted a portion of his reply below.

non-binding MOU has been signed in October, 2019 between RINL and POSCO. As per MOU, POSCO wishes to have at least 50% shareholding while the shareholding of RINL would be worked out on the basis of valuation of RINL’s in kind contribution of the land for setting up of the steel plant…… A joint team of POSCO and Hyundai along with the Ambassador of South Korea to India visited RINL, Visakhapatnam and participated in a meeting with representatives of RINL, NMDC and Ministry of Steel on 22-10-2018. Subsequently, officials of POSCO visited RINL on 9-7-2019, 23-9-2019 and 20-2-2020 in connection with setting up of the plant.”

It is surprising that such an MOU was signed behind the back of the AP State Govt, behind the back of RINL’s employees,  behind the back of the people, particularly behind the back of the families of the farmers who were forced to part with their fertile agricultural lands for the steel plant half a century ago, on the premise that their lands were required for the sacred “public purpose” of setting up a steel plant exclusively in the public sector for the benefit of this region. A PSU means a lot for the people, as it is a vehicle for translating the social policies (e.g. reservations, regional development etc.) of the government into tangible action.

Also Read : Vizag Steel: Public’s steely resolve against disinvestment

Under the then existing land acquisition law, such forcible land acquisition could be undertaken only if it was meant for a public purpose as defined in the law at that time. Neither the Centre, nor the State, nor RINL has the authority to divert the land for any other purpose. Apparently, the Union Ministry of Steel forced RINL to sign an MOU with POSCO in violation of the letter and the spirit of the land acquisition law, which amounted to a gross breach of the public trust. 

It is distressing that the Union Ministry of Steel had meetings with RINL, POSCO and Hyundai several times at the site but the State govt was kept in the dark. Does it not imply disrespect to the delicately balanced federal relationship between the Centre and the State as envisaged in the Constitution? It is the State that deals with the concerns of the farmers whose lands were taken for RINL. It is the state that deals with the concerns of the workers of RINL.

What is the role of another S.Korean company, Hyundai in this matter? There is no mention of Hyundai in the MOU.

Also Read : Centre squarely responsible for losses of VSP

Visakhapatnam has had a bitter taste of yet another South Korean company last year, as a result of outright negligence on the part of its management, when the toxic fumes of styrene gas escaped into the environment from the unit of LG Polymers here, leading to loss of life, grievous injuries and long-term health impacts without adequate compensation or succour for the victims’ families. The LG Polymers accident will live long in the people’s memory.

How is POSCO selected, without competition, without following transparent procedures? Enclosed are news reports of February, 2011, when your party, namely, BJP, “smelt corruption” in the then UPA government clearing the same POSCO for setting up a similar steel plant in Odisha. POSCO’s track record in that connection, as elaborated by an official report of the then Environment Ministry, is well documented. Apparently, the successive governments have short memories of what they said earlier!

Clause 2 of the MOU refers to a “third party” being a shareholder of the RINL-POSCO joint venture. Which is that invisible entity? Why the secrecy?

Also Read : POSCO & Hyundai want to have VSP with 50 % Share

Neither the website of RINL nor the website of the Union Ministry of Steel has made any public disclosure of the contents of the MOU, as required under Section 4 of the RTI Act. This amounted to a violation of the RTI Act. No wonder that there have been serious attempts of late to dilute the RTI Act that fuels democratic processes.

A public spirited citizen from these parts, Shri T N Rao therefore had filed an application under the RTI Act seeking a copy of the MOU from the Union Steel Ministry. Whoever enacted the RTI Act has done a great service to upholding the citizen’s right to know, as envisaged in Article 19 of the Constitution. 

In response to Shri Rao’s application, the Union Steel Ministry had to disclose the contents of the MOU, a copy of which is enclosed.

What causes me utmost distress in so far as the MOU is concerned is Clause 7.4 about keeping the MOU confidential in the following words.

Each party agrees to keep secret and confidential all information, including the contents of this MOU, obtained from the other party in connection with the subject matter contemplated under this MOU“.

“Confidentiality” and “secrecy” from whom? is it meant to keep the people of this region in the dark? Is it to keep the intentions underlying the MOU secret so that the families of the farmers who gave their lands for the steel plant, may not come to know of it? Is it to keep them from seeking judicial intervention/

Clause 5 of the MOU refers to 1,167 acres of land to be given away to the Joint Venture with POSCO. The value of 1,167 acrs at today’s market prices may exceed Rs. 12,000 Crores. If the farmers had come to know the intention underlying the MOU, they would have questioned it in one voice!

Also Read : Vizag Steel: Public’s steely resolve against disinvestment

Clause 2 of the MOU cleverly refers to the land given to Gangavaram Port. The Centre should know that there was public anger when the government gave away land to Gangavaram Port at a nominal price.

The Steel Minister in his Rajya Sabha reply had also stated that the MOU would be “non-binding” but, according to the wording of the MOU, not all its Clauses are non-binding! For example, Clause 7.2 says that the requirements of Clause 7, dealing with the validity period of the MOU, the confidentiality clause, “public announcement” clause, “governing law and jurisdiction” etc. are all binding. The Steel Minister’s statement therefore needs to be taken with a pinch of salt.

Clause 7.6 (Governing Law and jurisdiction) is all the more distressing. It reads as follows.

This MOU shall be governed by the laws of Singapore. Any disputes, claims, controversies between the parties arising out of or in connection with the validity, enforceability, interpretation or implementation of this MOU or any part or provision thereof, which cannot amicably be settled between the Parties, shall be referred to arbitration. In the event of any disputes or differences arising between the Parties with respect to this MOU, which are not settled amicably, the same shall be referred to and finally resolved by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre. (“SIAC Rules”) for the time being in force which rules are deemed to be incorporated by reference in this clause. Arbitration shall be conducted in English. The legal seat and place of arbitration shall be in Singapore. The award shall be final and binding upon the Parties. The judgement upon such awards may be entered in any court having jurisdiction there of”

Also Read : Vizag Steel Plant : TDP gets a breather

Does India not have its own laws? Does not India have its own arbitration law? May I remind the Steel Ministry and the Union Government that it is the Arbitration and Conciliation Act, 1996 enacted by the Parliament as ACT No. 26 OF 1996 that applies to any arbitration proceedings in the country. Why should disputes arising in India be referred to a Singapore court of arbitration? If a foreign company does not trust an Indian law and an Indian institution, why should India in turn trust a foreign company to operate on its land?

This arbitration clause has serious implications for India’s sovereignty. For example, if a farmer whose land was forcibly taken under the land acquisition law as applicable in the seventies questions the legality of a private company (and a foreign company) acquiring a stake in it, this clause refers the dispute to the Singapore court of arbitration, which runs counter to the laws enacted in India by our own Parliament. 

Also, the MOU provision that refers disputes arising in India to a Singapore court violates the Indian Arbitration and Conciliation Act of 1996. 

Does this not raise concerns of national sovereignty being disputed? 

This brings into question an imprudent MOU signed by an equally imprudent Indian public authority overriding the legislative authority of the Centre and the States.

RINL being a PSU, under Article 12 of the Constitution, should be deemed to be an arm of the government. This implies that the government has indirectly become a party to such a highly regressive clause in an MOU which comes within the “binding” portion of it.

Also Read : Vizag Steel Plant: will Centre accept Jagan’s proposal?

India is struggling just now to come out of debilitating arbitration awards involving huge amounts to be paid to two foreign companies, namely, Cairn and Vodafone, passed in similar arbitration courts outside India. We do not seem to learn lessons.

Clause 7.1 of the MOU provides validity for this objectionable MOU till 23-10-2021, extendable till 23-10-2022. This MOU is far too regressive and patently illegal to be kept alive any longer. On behalf of the people of this region, I demand that the Steel Ministry be directed to revoke the MOU forthwith. In my view, to choose a private foreign company in such a highly non-transparent manner raises serious questions of propriety. Any proposal to allow a private agency to have a stake in RINL and its assets in a non-transparent manner is unacceptable. The question of privatising RINL is imprudent and it should be dropped forthwith.

Please place this letter for consideration by the Union Cabinet so that the government may collectively appreciate the feelings of the people of north Andhra Pradesh and take action in tune with their sentiments.

Also Read : Ghanta Srinivas resigns in protest against Centre’s decision


Yours sincerely,

E A S Sarma

Former Secretary to Govt of india





Please enter your comment!
Please enter your name here

Related Articles

Stay Connected


Latest Articles