Post Mortem

Reconsidering Article 371(A) in the context of oil exploration in Nagaland

By Nagaland Post | Publish Date: 4/26/2021 1:20:21 PM IST

 Yours truly is not a historian or a geologist to write about oil exploration activities in Nagaland nor a legal expert to comment on the special provision extended to Nagaland under Article 371(A) of the Constitution. However, as a layman and an equally concerned Naga, a few pertinent points have been placed before all esteemed readers regarding the need for urgent resumption of petroleum operations in Nagaland in the light of Article 371(A) versus the dramatic shift in global energy transformations that is taking place around us.

As the geo-political issue of Nagaland is presently entangled and mired with complications over who owns the land, mineral and its resources; a precious mineral resource, popularly known as ‘black liquid gold’ is literally flowing past that we may miss it forever. We must realize that the world is slowly shifting towards reducing dependency on oil by leveraging on cleaner, alternative fuels having greater efficiency.The phasing out of vehicles running on fuel has already started in India as well. Though this transition will not be sudden and immediate, yet, the push for this change is gaining momentum. Therefore, in this uncertain time, I am sure all of us as responsible Nagas, our leaders, policy makers and the Government will sense the urgencyand take atimelydecision so thatlong term sustainable economic and social benefitsis derived before it gets too late. 

Sixty years ago, the special provision of Article 371(A) was extended to Nagaland in order to protect and preserve the traditional laws, practices, customs, land and its resources. Throughout this long journey, the special provision has indeed protected our land and mineral resources from being misused and exploited e.g. Champang oil fields etc. Yet we can also understand that this provision does not stop us from taking up petroleum operations. It does not come in the way ofprogress and socio-economic development for the state through such operations. However, what has hindered us from doing so is the fact that we have dragged the issue into litigation and complicated matters to our own disadvantage.

Today, what immediately comes to mind is ‘How long do we preserve? How much longer should we wait? Sixty years (roughly meaning three generations) have come and gone. So in the present scenario, I am sure our fore-fathers and freedom fighters who sacrificed (with their blood, sweat and tears) will have no misgivings over resuming oil exploration and development if we can utilise them for the right purpose at the right time. We are placed in a precarious situation where the‘sword of Damocles’ hangs over us. The ‘hanging sword’ can be perceived as the impending risk of fossil fuel becoming irrelevant (as an energy source) in the near future. As responsible Nagas, I feel this is the right time to boldly take advantage of the opportunity when a window is still open. We need to reconsider and view Article 371(A) from a different perspective so that it works to our advantage.

A view depends upon the view point. To remain adamant in our present understanding of Article 371(A) may only prolong and further complicate matters. To me, what can be inferred from Article 371(A) clause 1(a)ivis that the Legislative Assembly needs to pass a resolution (after examining the pros and cons) on the ‘acceptability’ of an Act to be made applicable in Nagaland. In our context, the Act would mean Petroleum and Natural Gas Rules (PNG) that govern the upstream oil and gas sector in the Country. It is applicable in all other states of India. While examining the applicability of the Act, it is natural that difference of opinion and dissensions will arise. However, with political will and softening of stands (by both Centre and State), better sense can prevail to accommodate differences and iron out rough edges. There is always scope for amendments and adjustments to suit the call of changing times. After all, laws and Acts are made for man, not man for the law.

Meanwhile, all of us know that Nature is not static. During the last few decades, geological and geophysical changes must have occurred which are not visible to us (both surface and sub-surface). There has been earth quakes, rivers have changed courses and even dried up too. Till today, Nagaland is perceived to be a hydrocarbon rich province. But where is the confirmation to make the tall claim that the perceived oil reserves are still intact beneath us? Mere sighting of oil seepages do not necessarily confirm the presence of oil beneath that particular plot of land, field or stream. The source can only be ascertained after exploration activities are carried out further. What is feared most today is that the oil story of Nagaland may end up like a rainbow which appeared but disappeared before we even realised. 

Oil exploration is a cost intensive venture with uncertain returns due to inherent risks and uncertainties associated with exploration. Seismic data acquisition, processing and interpretation activities in Nagaland could cost anywhere around Rs. 15 to 20 lakhs per line kilometer (LKM) and hundreds of LKM of data would be required to make proper geological & geophysical assessment. An exploratory well is estimated to cost around Rs. 50 – 60 Cr. It is a well-known fact that a 1:3 exploration well success rate is considered good which means that a considerable amount of risk money would have to be invested in order to realize the yet to find (YTF) potential of the state. The oil business is very capital and highly technology intensive industry. Thus, it would not be possible for individual land owners or small operators to carry out hydrocarbon exploration and production operations in a medium to large scale. 

Coming back to our present state, statistics reveal that Nagaland has a population of approx 23 lakhs out of which 30-35 % makes up the youth demography. Again, within this 30-35 % range, it is estimated that 80 - 90,000 youngsters fall within the category of educated unemployed. What about a count on the number of uneducated unemployed youths? The figure could even be more alarming in the prevailing pandemic scenario. All these during a phase when the State Government is struggling to generate revenue to tide over the deficit financial budget besides addressing the alarming growth of unemployment plaguing our Society today.

Therefore, in this critical juncture, a strategic approach to come out of the present imbroglio could be to embark on the oil exploration and development option. We can think on the lines of forming a State owned oil Company such as ‘Nagaland State Energy Company’ which will have the potential to trigger off economic growth and development in Nagaland. This Nagaland owned Energy Company can enter into a joint Partnership venture/Consortium with a ‘Strategic partner’ as the ‘Operator’ to handhold and carry forward the newly formed Company. The venture can be modelled in such a way that the newly formed Company is not exposed to any risk money in respect of exploration and development operations. The capital expenditure (CAPEX) can be borne by the Strategic Partner. The issues of royalty and revenue sharing etc can be discussed, negotiated and formulated amongst the stake holders to ensure a win-win situation. 

Considering the fact that the business is also a labour intensive venture, short term as well as long term benefits will accrue to Nagaland in the form of contracts for supply of materials, equipment, vehicles etc. It will also cater for direct and indirect labour engagement avenues (skilled, semi-skilled, and unskilled). Subsequently, the Company can bring about profound social and political impact. It can generate a positive effect on development by creating jobs, encouraging business and providing vital infrastructure for remote communities such as roads, electricity, education and health etc. 

Further, the Company may even plan to set up its own Refinery which in turn will open up avenues for marketing petroleum products. As economic activities pick up; schools, hospitals, township development would spring up fast. On this, the oil townships of Duliajan and Digboi in upper Assam are living testimonies of what transformations can happen to the Society through petroleum operations over the last many decades. Revenue will be generated to contribute to the State Exchequer. For example, Assam Government receives more than Rs2000 crores annually as royalty on crude oil and Natural gas from Oil India Ltd alone. 

This Company (if the idea materializes), will belong to the Naga people. It will be within the ambit of Article 371(A) to respect the deep rooted attachment of Nagas over their land and mineral resources. As regards applicability of existing PNG Rules and Regulations, a ‘give and take’ mechanism (that is mutually benefitting and accommodating) to all stakeholders can be adopted.

Without getting into further complications and litigations, this option could be a fast strategic way forward a ‘Naga Energy Company’ to trigger, power and boost the Naga economy. Otherwise, ‘wishful thinking’ is what you may conclude yours truly to be at this precarious juncture.

Meyabi A. Niphi, 

Dy Gen Manager Manager (Admin-Frontier Basin), 

Oil India Limited

(The authoris an alumnus of XLRI, Jamshedpur works in Oil India Limited, Duliajan, Assam. The views expressed are personal.)

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