Food Park at Amethi: “Promoter failed to compile with the food park norms” says Badal

The Union Minister of Food Processing Industries (MoFPI), Harsimrat Kaur Badal made a statement in the Lok Sabha with regard to allegation from Rahul Gandhi criticizing the Modi government for cancelling the Mega Food Park at Jagdishpur, Uttar Pradesh to be implemented by Shaktiman Mega Food Park Pvt. Ltd, saying that in-principle approval accorded to the project by the ministry was cancelled because of inordinate delay by the promoter company in meeting the pre-conditions of possession of minimum 50 acres of land in its name even after granting extension several times to enable it to complete the pre-conditions for Final Approval.

In a Suo-Moto statement in Lok Sabha the minister said that the ministry is implementing a Mega Food Park Scheme to create modern infrastructure for food processing sector in the country. Under this scheme, a Mega Food Park was granted In-Principle Approval on September 24, 2010 to Shaktiman Mega Food Park Private Ltd for setting up a project at Jagdishpur now in district Amethi, Uttar Pradesh. As per the Scheme guidelines, the Promoter of the Park was required to submit a Detailed Project Report (DPR) of the project with possession of minimum 50 acres of land in the name of Promoter Company within six months from the date of issue of In-Principle Approval. The Promoter submitted its DPR of the project on March 23 2011 which was appraised by professional Programme Management Agency appointed by the Ministry under the Scheme.

The minister further said that the appraisal of the DPR revealed that the promoter company was not in possession of required minimum 50 acre of land along with permission to set up the Mega Food Park Project. The promoter company, therefore, granted extension several times to enable it to complete the pre-conditions for Final Approval. The last extension was granted upto March 30, 2014 to the promoter company to meet the pre-conditions for Final Approval as per the scheme guidelines.

She went on to say that the promoter company proposed to acquire land for the project from Indo-Gulf Fertilizers Ltd., a fully owned subsidiary of Aditya Birla Nuvo Limited. The said land was a portion of 800 acres of land allotted to Indo-Gulf Fertilizers Ltd. by Uttar Pradesh State Industrial Development Corporation (UPSIDC) on a long lease exclusively for the purpose of setting up fertilizer production facility. Therefore, UPSIDC’s permission was required for Indo-Gulf Fertilizer Ltd. for subleasing this land to Mega Food Park Promoter company with conversion of land use for setting up of Mega Food Park on this land. Permission of UPSDIC was also required for further subleasing of plots by the promoter company to prospective food processing units which would come up in the Mega Food Park. UPSIDC informed vide letter dated July 19, 2012 that permission to sublet the land by Indo-Gulf Fertilizers Ltd. has been approved and they have been asked to complete the necessary formalities. The permission to sublet the land was subject to payment of lease rentals as per the revised rates and completion of the formalities as required according to UPSIDC’s bye-laws. However, the promoter company could not complete the formality of acquiring of the requisite land in its name. Therefore, the SPV was issued a show cause notice on October 8, 2012 asking it to explain as to why In-Principle approval accorded to the project would not be revoked for failing to meet the prescribed pre-conditions for Final Approval as per the scheme guidelines.

In response to show cause notice, the promoter company apprised that apart from the land issue which need to be resolved, they have also applied to the Ministry of Petroleum and Natural Gas (MoP&NG) for allotment of gas at an administered price for setting up a captive power plant in the Mega Food Park which is necessary to supply uninterrupted power and which is a pre-requisite for the success of the Mega Food Park.

The Ministry of Petroleum and Natural Gas vide their letter dated December18, 2012 communicated that considering the acute shortage of domestic gas in the country and lowest priority accorded to captive power plant for allocation of any domestic gas, it would not be possible to allocate domestic gas for the proposed mega food park. However, supply of imported LNG through GAIL for meeting the requirement of captive power plant could be feasible. This was communicated by the Ministry of Food Processing Industries to the promoter company on January 02, 2013. However, the promoter company vide their letter dated January 16, 2013 informed the Ministry that using imported LNG for captive power generation would be totally uneconomical and would therefore make the project financially unviable. The promoter company also conveyed that they cannot go ahead without domestic natural gas being allotted to them for captive power plant at the administered price.

The progress of the project was reviewed in the Ministry on June 9, 2014. During the review meeting the representative of the promoter company informed that without supply of the gas to the project at administered price, the promoter company would not consider the project to be viable. In the absence of availability of gas at the administered price the promoter company expressed its inability to pursue the project.

The promoter company vide their letter June 26, 2014 informed that it is yet to acquire the required land as changes in UPSIDC guidelines for subleasing was still under consideration. The promoter company requested for further extension of time till 30th September, 2014.

The matter of inordinate delay in meeting the necessary pre-conditions for Final Approval by the promoter company was considered by the Inter Ministerial Approval Committee (IMAC) chaired by Secretary, Food Processing Industries on June 30, 2014. In view of inordinate delay by the promoter company in meeting these pre-conditions for final approval, the in-principle approval accorded to the project by the Ministry was cancelled. The decision of the cancellation was conveyed to the promoter company on July 11, 2014.