‘Oily’ conundrum

Imkong Walling

The prospect of revenue motivated Nagaland to dabble in petroleum exploration over half a century ago. The irony has been that the same subject of revenue has haunted oil production in the state ever since. 

Ideally, the proceeds from oil production go towards the economic well being of a country, but Nagaland’s unique Constitutional positioning in the Indian political framework has had the state unable to exploit its known and estimated petroleum reserves. A border dispute with the neighbouring state of Assam, an unresolved Indo-Naga political issue, a Constitutional guarantee known as Article 371 (A) at odds with the Union government’s petroleum law, besides the inter-connected question of who actually owns sub-surface resources have all combined to put the brakes. 

Amid the din, one in particular, as to who actually owns the land, tends to get overlooked and misconstrued. It is a result of the provision in Article 371 (A) relating to ‘land and its resources’ not giving clear insight to determining proprietary rights and thereby the contention on royalty-sharing.

 Is it the community as a whole or the individual land-owners?   

In practice, individual clans, and not the village or tribe, wield the rights over land in Nagaland, contrary to popular notion. This overlooked undercurrent played out, though not overtly, the last time the state government re-attempted production in the Changpang oil field via a private firm contracted under the Nagaland Petroleum and Natural Gas Regulation, 2012. The stand of the individual land-owners was anything but hostile, only that the government’s bid did not sit well with the tribal hoho.

The answer to untangling the mess lies in resolving the issues noted earlier though it is easier said than done. Nevertheless, assigning Constitutional clarity to the ‘land and its resources’ clause with respect to sub-surface mineral resources is within the scope of the state. 

Assigning clarity would imply interpreting the land rights the clause seeks to provide, by taking into consideration the cultural traits of all the communities in clearly comprehensible terms. 

The state government can then explore models in countries where governments have working fiduciary agreement with indigenous communities in terms of mineral resources development. Canada is one example where the government has a royalty-sharing policy with native landowners or First Nations.

While the Canadian model is not without criticism, it involves negotiating ‘Impact Benefit Agreements’ (IBAs) between First Nations and developers with the government serving as a regulatory authority. Within the scope of the contract includes royalty sharing, employment opportunities, mitigating environmental and cultural hazards, besides dispute resolution. It is regarded as a means to ensure indigenous people benefit from resource development. 

In Nagaland’s case, however, it would be wrong to assume that exploiting the state’s oil reserve would imply automatic growth. For example, the peanut-size revenue on coal and forest products collected by the state government in contrast to a large extraction volume. 

Fiduciary obligation demands integrity, that of policy-makers not viewing the oil reserves as a means to amassing personal wealth. Oil-rich Norway and the Gulf states owe economic progress to robust governance and anti-corruption measures, ensuring their oil revenue percolate down to the community. 

As for the land-owners, they cannot monetise the wealth underneath by virtue of proprietary rights alone. Extractive industries demand government regulation plus technical expertise and the accompanying service charges, which generally takes the shape of a revenue-sharing contract. It is a mutually beneficial relationship. 

The writer is a Principal Correspondent at The Morung Express. Comments can be sent to imkongwalls@gmail.com