RIL's Mahamumbai SEZ may be split into two

Reliance Industries Ltd (RIL), the country's largest private sector company, is considering the option of slicing the Mahamumbai special economic zone (SEZ) project into two entities to beat the ceiling of 5,000 hectares (12,360 acre) imposed by the government last Thursday.

Sources close to the development said RIL, which was planning two adjacent economic zones in the coastal district of Raigarh in Maharashtra, is looking to set up three special purpose vehicles (SPVs) to develop the various components of the project. According to the original plan, the Mahamumbai SEZ was to come up over 10,000 hectares.

An RIL source said the company has already set up an SPV to bid for the 22-km trans-harbour bridge connecting Sewri in central Mumbai to Sheva in Navi Mumbai, north of the city. This was originally part of the SEZ project but will now be developed as a separate entity.

"We could split the main project into two companies and are looking at developing the bridge as part of a separate entity," an RIL source said. The financial bids for the bridge project will be opened soon after the State Assembly session ends.

RIL is also considering similar options for its 10,000 hectare project at Jhajjar in Haryana. The Haryana project could have one main SEZ and four smaller SEZs. Airports and power plants will be part of the projects in both states but will be developed by separate SPVs, officials said.

RIL has so far managed to acquire less than 2 per cent (1,000 acres) of the land it needs for its massive Mahamumbai SEZ project. The company has said it will seek the state government's help in acquiring land since buying it from farmers can be a major problem. "Even a single farmer can stop the progress of a project of this size and we need the government's support on this," executives said.

The government's new rules, however, bar states from acquiring land for SEZs. Nevertheless, land acquisition by the state government is in full swing at Mahamumbai. Government officials say they have not yet received any communication from the Centre on the issue.

Ever since the SEZ Act was cleared in February 2006 by the Congress-led government, more than 400 zones have been announced. Of these, 63 have received final governmental approval and another 83 projects were cleared by an empowered group of ministers (E-GoM) last Thursday. The EGoM's land restrictions have impacted RIL and Adani-owned Mundra Port and SEZ projects.

Meanwhile, former BJP MP Kirit Somaiya has demanded an explanation from the EGoM on the 5,000 hectare ceiling. In a letter to EGoM Chairman Pranab Mukherjee, Somaiya has sought a clarification on whether two SEZs can be set up next to each other.

"A developer can have many SEZs of 5,000 hectares in adjacent areas. Will all such SEZs be clubbed together for fixing the ceiling?" he has asked.