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LATEST NEWS UPDATES | Adani's SEZ under government scanner-Sidhartha

Adani's SEZ under government scanner-Sidhartha

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published Published on Aug 23, 2012   modified Modified on Aug 23, 2012
-The Times of India

The threat of cancellation looms large over Adani Ports & Special Economic Zone's 1,840-hectare enclave in Gujarat for alleged violation of Centre's norms, including unauthorized construction over a plot that was not vacant.

While a show-cause notice was issued a couple of months ago, and permission "suspended", the commerce and industry department is expected to issue the final orders over the next few days. Sources said commerce secretary S R Rao on Friday gave a "formal hearing" to the Adani Group.

The company is setting up the country's largest SEZ spread over nearly 6,500 hectares, after a merger of "contiguous zones" was allowed in 2009. Recently, official sources said, the promoters wanted to merge three land tracts of 1,840 hectares (1,226 hectares, 385 hectares and 227 hectares) into the notified zone, arguing that they were also "contiguous".

 The oil-to-ports conglomerate is learnt to have argued before the government that it has not violated norms. When contacted, an Adani Group spokesperson, however, refused to comment saying the matter was sub-judice in the Gujarat High Court.

The 6,500-hectare SEZ, the largest approved so far, was formed after merging contiguous zones into one and is the largest approved zone, in terms of land area, but may end up being the first whose permission is cancelled for violation of norms. Although a group of ministers had capped the land area of special economic zones at 5,000 hectares, a concession was made later so that developers who had planned enclaves on contiguous plots did not suffer. This resulted in the zones in Mundhra being merged into one, complete with a port and power plant.

Later, the developer approached the commerce department with a plan to merge three plots - which together add up to 1,840 hectares - on the grounds that they were contiguous. While the government was still discussing the proposal, the commerce department decided to inspect the plots and discovered that construction had already started on one of the plots, official sources said. They said the three tracts of land were "hardly linked" although the developer has argued that there is a 15-metre passage connecting them, which may not be visible on the map.

Adani is also learnt to have told the commerce department that the plot did not have a "commercial structure". The Gujarat-based business house had paid over Rs 11 crore duty after the commerce department pointed out that it was building a structure over land which was not part of the zone. The company has informed the government that it was "inadvertent" and it paid up on its own.

Sources, however, said even if the permission is cancelled, it will in no way deter the developers from seeking fresh approval - for the entire area - from the government. Besides, the company had hardly availed of tax sops from the government and is unlikely to face the prospect of refunding money.

The Times of India, 23 August, 2012, http://timesofindia.indiatimes.com/business/india-business/Adanis-SEZ-under-government-scanner/articleshow/15610846.cms


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