If we go by the state Cabinet Sub-committee on Oil & Natural resources (CSCON) already published “Modality on extraction of oil and profit sharing”, there’s the danger of the spirit of democracy being subverted and the rise of an oligarchic form of governance albeit in a democratic set-up. If the modality is passed in the state legislature in its present format, an equitable distribution of wealth will not suffice and the term socialist in “sovereign socialist secular democratic republic” as the preamble of the Indian constitution will be an anomaly. Socialism means absence of both social and economic inequality and India, the country, despite embracing free market economy is still committed to its socialist values or a “welfare state” as reflected in social upliftment programmes such as SSA, JNNURM, MGNREGA, etc. The absence of equitable distribution of oil money in terms of development and concentration of wealth in few hands may in the long run lead to social unrest and subversion of democratic voices. CSCON envisages a 16% royalty on the crude oil extracted and sold by oil companies. The breakup is given below:
1. Share of Nagaland government------- 6. 8%
2. Share of Well-head landowner------- 2.0%
3. Share of surrounding landowners--- 6.0%
4. Share of oil bearing district------------ 1.6%
Total: 16.0%
Of late, oil exploration has been carried out in many districts of Nagaland and the CSCON oil profit sharing modality is a cause for much concern. Out of the 16% royalty, the landowners and the oil-bearing districts receive the lion share of the proceeds, that is, 9.6% and the government is left with only 6.8% for developmental activities for the rest of the state. This modality has potential to create huge economic disparity since oil is not available in everyone’s backyard or in every district.
In 1994, ONGC paid Nagaland 33 crores as 2% royalty for oil extracted. If the CSCON modality of 16% royalty were to be implemented today, taking the 33 crores as rough payment accrued and 1994 as base year, then the total royalty amount payable to the state would be 264 crores in 2012. The breakup thereof would be (without adjusting for today’s price which is above $100 per barrel vis-à-vis 1994 when the oil per barrel was only $5) ;
1. Share of Nagaland government- 6. 8% or Rs. 107.0 Cr
2. Share of Well-head landowner--- 2.0% or Rs. 33.0 Cr
3. Share of surrounding landowners- 6.0% or Rs. 99.0 Cr
4. Share of oil bearing district----------1.6% or Rs. 25.0 Cr
The above figure is just a guess estimate for the actual extraction will be far above 1994 level, in terms of several millions of barrels, and several times more profitable once the oil companies get the go ahead from the government and landowners. From the above it is clear that the oil bearing landowners get the maximum share and the government with a responsibility to implement a “Welfare State” gets a pittance, relatively speaking. We’ve a new class of multi-millionaires waiting in the sidelines as and when legislation is brought into fore. There’s nothing wrong with newly acquired wealth but problem will arise when an elite class of individuals, the new oligarchs, end up controlling the social, economic and political space of Nagaland at the peril of the vast under privileged community and it does not augur well for the health of our society when the rich become richer and the poor becomes poorer. Nagaland does not have strong democratic institutions in place nor do we’ve the necessary checks and balances of mature democracies to arrest potential slide into social and political mayhem and disparity. Article 371A which confers private ownership of land will usher in massive economic disparity and consolidation of economic wealth and political power in the hands of a few which CSCON and tribal hohos included has not been able to address at all.
If CSCON modality is adopted and implemented into law in its present format, our society will be wading into unchartered waters where lives will be put at peril. Already the frustrations of economic disparity in Nagaland are being poured out in the form of crimes and other anti-social activities. Economic crimes are on the rise too like pyramid marketing scams, cheating, etc. White collar crimes such as corruption are all too pervasive now. At such a juncture, the consolidation of power in the hands of a few and an unequal distribution of oil wealth is a sure recipe for disaster.
There is no justification for hurriedly adopting the modality in its present format. A time will come when civil society organisations should sit across the table to thrash out an “Equitable Modality” with the help of in-house experts like Geology & Mining Deptt ( Modality was prepared by Thornton, Australia based firm) but it should be done only after the on-going peace talks reaches its logical conclusion.
Sd/-
Naga Council
