Thousands of farmers are challenging India’s refinery project with Saudi Aramco


  • Last month, Saudi Aramco signed a joint venture agreement with three Indian oil companies to develop a $44 billion refinery in the port city of Ratnagiri, in the state of Maharashtra.
  • The proposed refinery that will require 15,000 acres of land and is targeting a daily output of 1.2 million barrels a day.
  • However, around 80% of the land required is currently used for mango and cashew plantations, as well as fishing.

The expansion plans of Saudi Aramco, the world’s largest oil company by revenue, are being threatened by an unlikely force - India’s mango farmers.

Last month, the Saudi government-owned oil giant signed a joint venture agreement with three Indian oil companies -- Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum -- to develop a $44 billion refinery in the port city of Ratnagiri, in the state of Maharashtra.

Thousands of farmers, however, are challenging the project by refusing to give up their land.

Saudi Aramco will own a 50% stake in the proposed refinery, which will require 15,000 acres of land and is targeting a daily output of 1.2 million barrels a day. The Saudi Arabian oil giant is planning to dilute its stake and bring the Abu Dhabi National Oil Company (ADNOC) aboard. The refinery will give both companies an assured demand for their crude oil.

The refinery’s Indian promoters have touted the number of jobs the project will create, estimated to be around 150,000, to no avail. To allay concerns, they have also pledged to maintain tracts for mango and cashew plantations.

An uneasy trade-off

The project, which has been in the works since 2015, is important to increasing India’s refining capacity and securing a steady domestic supply of oil. This is an urgent need given the high cost of importing oil and the government’s ever-widening current account deficit.

However, the immediate cost to the farmers in the Ratnagiri region isn’t insignificant. Around 80% of the land that has been earmarked for the refinery is used by these farmers to grow mangoes and cashews, and by fishermen. Around 22,000 farmers and 4,500 fishermen are expected to be impacted.

Farmers from 14 villages in the Ratnagiri area are protesting against the project. The issue has reached fever pitch, with Opposition parties like the Congress offering their support to the farmers. Even the Shiv Sena, a breakaway ally of the BJP government in Maharashtra, has opposed the project.

A thorn in the government’s side

The civil resistance to land acquisition has been a proverbial thorn in side for the Narendra Modi administration. A number of transport and infrastructure projects have been stalled, including a landmark bullet train programme in Gujarat.

Taking advantage of an impasse in the recently-concluded session of Parliament, the government was able to pass the Specific Relief (Amendment Bill) without any discussion. The bill, which is pending in the Rajya Sabha, prevents courts from imposing injunctions in cases involving infrastructure projects wherein property rights are alleged to be violated.

The move followed the Modi government’s failed attempts to water down the protection clauses in the country’s Land Acquisition Bill, which was passed in 2013. Under the bill, 70% of the relevant land-owners are required to give their consent for an acquisition to go through.

The promoters of the Ratnagiri project are still optimistic. For its part, the Maharashtra government is looking into the possibility of relocating the project to the landlocked region of Vidarbha.

The refinery was initially supposed to commence operations by 2022. But now, given the current unrest, that looks highly unlikely. The land acquisition might even be delayed until the end of 2019, when both national and state elections in Maharashtra are concluded.

India will have to continue to source most of its oil requirements from other countries until then.
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