E-auction may put an end to Punjab's sand mafia. But will it help customers?

Demolishing the sand mining mafia was one of the key campaign issues during the Punjab Assembly polls for the Captain Amarinder Singh-led Congress government.

This weekend, the state government held an e-auction of sand mines and secured bids worth a whopping Rs 1,026 crore for 89 mines – the highest-ever earnings for the state from the sand mining business. 

But the success has also opened a new can of worms: questions are being raised as to whether people will actually get sand cheaper that will make housing affordable. The detrimental impact on the environment is yet another concern.

Handsome earnings

The government claims that the auction has paved the way for the release of supply pressure and stabilisation of prices. The bid amount this year is more than 20 times it was last year; it fetched only Rs 40 crore, indicating the extent to which the sand mafia was controlling the business and causing huge losses to the state coffers.

After the auction, Amarinder said the release of surplus sand into the market will ease pressure, thus earning huge revenue for the state government, which will eventually lead to significant lowering of sand prices while allaying fears of the high progressive bidding triggering a price increase.

A government spokesperson disclosed that 1,000 bidders participated in the e-auction of 102 mines conducted by the department of mining in four blocks on May 19 and 20 under the supervision of a retired High Court judge and two IAS officers from other departments. Of the 102 mines put on auction, earnest money was received against 94, of which a total of 89 mines were finally auctioned.

He further said the new mines for which the e-auctions have been successfully conducted will release an estimated 1.30 crore tonnes of material into the market, thus adding to the existing capacity of 1.05 crore tonnes. Located in the crucial high-demand areas of Ludhiana, Mohali, Jalandhar and Amritsar, among other important regions, the mines, once operational, will fill the yawning supply-demand gap for sand in the state to ease the pricing pressure.

Cracking down on the mafia

The government claims that sand prices in Punjab had witnessed some escalation in recent weeks following a crackdown on the sand mafia that had mushroomed under the patronage of officials the erstwhile Shiromani Akali Dal (SAD)-BJP government.

It claims that steps have been initiated to get sand mining released from the clutches of the mafia. These include physical checks, with top-level district administrative and police officials working as nodal officers to check illegal mining. A detailed review is being conducted every month stationing of retired army personnel at mining sites is also being planned.

The government also plans to introduce satellite based monitoring besides installing CCTV cameras at crucial places.

Public interest

But government claims have been questioned by RTI activist and Aam Aadmi Party (AAP) leader Dinesh Chadha who has stated that the auction is against public interest and is disastrous for the environment. He has asked the state government to review its mining policy while appealing to the union environment ministry to intervene in the matter.

Stating that the Punjab government has auctioned 1.3 crore ton material for Rs 1,026 crore, he has calculated that the sand-gravel material has been sold for Rs 789 per ton to the contractors.

As per government terms, the contractor is additionally bound to pay Rs 60 per ton as royalty, Rs 6 per ton as Environment Management Fund and Rs 20 per ton as District Mineral Foundation Fund. The cost of transporting the raw material from the quarries to the crushers is around Rs 125 per ton on average. This brings he total to Rs 1000.

The Tipper vehicle used to transport sand-gravel has a capacity of 30 tonnes which means that a Tipper of raw sand-gravel would cost Rs 30,000 to the crushers and with a rent of Rs 10,000 per Tipper to transport processed sand-gravel to nearby cities it would cost Rs 40,000 to the end consumer while the contractor’s profit will be in addition to this.

He has pointed that in order to avoid losses while offering prices lower than Rs 40,000, under this policy, the contractors would be 'incentivized' to conduct large-scale illegal mining in large tracts of land in the neighbourhood of the auctioned areas. Chadha has warned that while on one hand common people would pay extra for sand-gravel under this policy and on the other hand natural resources will be depleted and harmed because of the non-scientific methods that are used in illegal mining.

Now the government has decided to release another 70 lakh tonnes of mining capacity soon to meet the demand for sand and bring the commodity price under control.

With the generation of a total capacity of 3 crore tonnes, it is looking at filling the demand supply gap, thus effectively decartelising the mining business and stabilising the price. It has allayed the fears of a price rise saying that the mining policy rests on the twin pillars of reasonable price for the people and reasonable revenue generation for the state coffers. 

“The revenue from mining was earlier being diverted into the pockets of the mafia, patronised by the erstwhile SAD-BJP government, and the Congress government was committed to effectively eliminate illegal mining and ensure level playing field for all,” said a spokesperson.

The consumer’s burden

However, there are reports suggesting that with almost 60% quarries fetching up to 40 times more price, it is obvious that the end consumer would have to pay more. Above all, if the business becomes non viable for the bidder, the government couldn't do much as the quarries have already been auctioned.

It is also being pointed that after high bids, if the profits remain on the lower side, the mine operators are likely to violate norms which is going to have a far reaching impact on the environment.

“There is every chance that the sand mining operators will now create an artificial scarcity while pointing at stringent laws to make more profits. If one bidder has got multiple sites or if three or four of them join hands, they can easily monopolise the trade in an area,” said a senior media person based in Ludhiana.

Another senior media person who has come out with a series of investigative reports on the issue over the years says, “The moot point is whether the government is able to check the unaccounted mining that has been on for years. This is many times over and above what is shown in papers. The second point is whether it can fix a rate for the sale of the processed sand ad gravel. The third and most important issue is that the people must be told whatever happened to the SITs formed to probe the illegal mining at various places in the state.”