Kerala Caught Between the Devil and the Deep Sea Over Rs 5,000-cr Fishing Investment Project

The state government is in trouble over an MoU it signed with a dubious American company following allegations of corruption and that it would affect the interests of fishermen. As ministers tied themselves up in knots denying even meeting the company's officials, the government will now be withdrawing from the project. The company had aimed to build 400 deep-sea fishing vessels and five mother vessels and help upgrade 14 harbours as part of the Rs 5,000-crore investment, reveals REJIMON KUTTAPPAN.

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LACK of due diligence in a Rs 5,000-crore investment in the fisheries sector by a US-based company has forced the CPM-led government in Kerala to withdraw from the project on February 24, 2021. This was five days after a Kerala Opposition leader raised corruption allegations in the project.

A senior official in the Kerala government told The Leaflet that an order cancelling the Memorandum of Understanding (MoU) between the Kerala government and the company will be issued. On February 22 too, the Kerala government had nullified a Rs 2,900-crore work order given by the company to a Kerala government undertaking to build 400 ships and five mother vessels as part of the Rs 5,000-crore investment.

QUESTIONABLE CREDENTIALS 

Investment documents seen by The Leaflet reveal that EMCC International India, a subsidiary of US-based EMCC Global Consortium, is headed by a US-based Keralite, chartered engineer Shibu Methratayil Varghese. Shockingly, the Minister of State for External Affairs V Muraleedharan had said that the Indian consulate found that the company didn't even have a valid address in the US. Muraleedharan said that the "Kerala government had signed the deal with EMCC even after the centre's warning".

In October 2019, Fisheries Department Principal Secretary K Jyothilal, had sent a letter to the Ministry of External Affairs requesting a check on EMCC's credentials. Even though government documents reveal that the company had initiated talks in April 2018 for the Rs 5,000-crore investment with Kerala Fisheries, Harbour Engineering and Cashew Industry Minister J Mercykutty Amma, the company's India office was opened only in 2019 with an authorised capital of Rs 1 million.

WHAT WAS THE PROJECT?

In a concept note submitted to the Kerala government on August 3, 2019, and seen by The Leaflet, EMCC International India said that it will invest in innovative technology development for the upgradation and promotion of deep-sea fishing in Kerala. According to the note, the company aimed to promote India to achieve its national fish product export target of Rs 75,000 crore ($10 billion) by 2022. The company planned to have its fishing vessels, launch deep-sea fishing, process the catch, transport it locally and export it to global markets.

According to a letter submitted by the company to Kerala Industries Minister EP Jayarajan on February 11, 2021, seeking cabinet approval for the project, it aimed to build 400 deep-sea fishing vessels for Rs 592 crore, five mother vessels for Rs 79 crore and upgrade 14 harbours for Rs 207 crore. The letter reveals that Rs 1,110 crore will be invested for setting up 50 seafood processing plants, Rs 444 crore for four hospitals for fishermen and Rs 355 crore for six air ambulances. It added that Rs 148 crore will be invested for setting up 200 fish stalls and Rs 1,036 crore for 14 aquaculture farms.

The document also reveals that Rs 814 crore will be spent as fishing labour cost, Rs 266 crore as packing labour cost, Rs 99 crore as fish stall labour cost, Rs 29 crore for fishermen's welfare, Rs 74 crore for ISRO surveillances and Rs 74 crore as operation cost. The entire investment amounts to Rs 5,324.49 crore.

Meanwhile, the EMCC's project concept note adds that it will provide jobs for 23,000 people in various categories. It says that approximately 16,000 fishermen will be trained and deployed across 40 pilot prototype vessels and 1,500 men and women will be trained and employed in over 200 processing and retail outlets to be launched across the state.

It added that drivers, logistics and merchandising resources, quality control/quality assurance professionals, researchers and scientists, technologists, and marketers for over 1,000 people across multiple skill sets and verticals will also be given jobs. However, the note adds a crucial point: "They estimate a period of 20 to 25 years to transfer the deep-sea fishing project to the fishermen, but this precise timeline can be arrived at only after the Proof of Concept is completed."

The note also reveals that the project funding will be based on the BOOT (Build, Own, Operate and Transfer) system, and EMCC Global Consortium through its Indian subsidiary EMCC International India shall be the source and guarantor of the funding.

 GENESIS OF THE PROJECT

In April 2018, EMCC claimed to have met Kerala Minister J Mercykutty Amma in New York and discussed the project, "Fisheries Research & Development for the Up-gradation and Promotion of Deep-Sea Fishing Industry in Kerala, India". In July 2019, EMCC also met KR Jyothilal. On August 2, 2019, the EMCC submitted the concept note to Jyothilal, requesting a letter of intent from the Kerala government. On February 28, 2020, EMCC signed an MoU with the state government on the issue at ASCEND 2020—Kerala's global investors meet. On October 30, 2020, EMCC submitted a request for land allotment in Kerala State Industrial Development Corporation's (KSIDC) Mega Food Park at Pallipuram for setting up a seafood processing centre.

On February 2, 2021, EMCC signed an MoU with Kerala Shipping Inland Navigation Corporation (KSINC) to build 400 ships and five mother vessels. The next day, it received a letter from KSIDC stating the allotment of four acres to set up a seafood processing unit. On February 11, EMCC sent a letter to Kerala Industries Minister EP Jayarajan requesting cabinet approval for the project.

CONTROVERSIAL DEAL

On February 19, 2021, Ramesh Chennithala, Kerala Opposition leader, alleged that the "Kerala government had signed a deal with US company for deep-sea fishing in Kerala coast". Alleging that it was a corrupt deal, Chennithala appealed to the state government not to proceed with the project, saying it would adversely affect lakhs of fishermen. "There is a shortage of fish in the sea. How the government has come into an agreement with an American company for deep-sea fishing? This is against the interests of fishermen. This is a corrupt one and a high-level committee should probe the matter," he said.

On the same day, responding to questions from reporters on Chennithala's charges, Mercykutty Amma said: "These are baseless allegations and have no merit. The opposition leader is speaking of an imaginary contract. No agreement has been signed by the government to allow fishing by the US firm."

Releasing a letter from EMCC, Chennithala also alleged that Mercykutty Amma had met EMCC officials. The minister refuted the charges. But on February 20, 2021, Chennithala released a picture revealing Mercykutty Amma with EMCC officials.

REJECTING ALLEGATIONS

The same day evening, Kerala Chief Minister Pinarayi Vijayan rejected allegations of a deep-sea fishing contract with the US firm. He said no foreign company will be allowed to engage in deep-sea trawling in the state's waters.

EMCC had quoted Kerala Fisheries Policy 2018, Clause 2.9 in the letter sent to Minister Jayarajan this February. Clause 2.9 says that "to reduce the stress on overfishing in Continental Shift area, deep-sea fishing vessels will be encouraged to move to Continental Slope area". However, The Leaflet found that Clause 2.2 of the same policy asserts that "pressure will be put on the central government to stop local and foreign trawlers from doing deep-sea fishing to preserve the marine wealth."

The National Fisheries Policy 2020 says that states play a pivotal role in fisheries governance as fisheries is a state subject.

 According to the policy, the role of the central government is to complement the former's efforts in this regard under the guiding principles of cooperative federalism. While inland fisheries is fully managed by state governments, marine fisheries are a shared responsibility between the central and coastal states/Union Territories.

COASTAL RESPONSIBILITIES

Coastal states/UTs are responsible for the development, management, and regulation of fisheries in sea waters inside the 12 nautical miles (22 km) territorial limit. And the Indian government is responsible for the development, management, and regulation of fisheries in the Exclusive Economic Zone waters beyond 12 nautical miles and up to 200 nautical miles (370 km). Therefore, it is imperative that the center effectively manages and regulates this common resource in close collaboration with states.

Pinarayi also said: "Neither the state government nor any of its departments have signed an MoU in this regard. KSINC is a public sector undertaking. It is normal for such undertakings to sign MoUs in any conferences or investment meets. It would come for the consideration of the government only later. A policy decision in this regard would be taken only then."

KSINC had signed a work order from EMCC to build 400 trawlers, five mother vessels and harbours. According to a note from KSINC, it would cost Rs 2 crore for one trawler.

Meanwhile, there are unconfirmed reports that the government may take action against Prasanth Nair, MD of KSINC. Government sources revealed that KSINC's signing the deal to build trawlers and mother vessels had put the government on the back foot. Interestingly, on February 28, 2021, Chennithala released the MoU document signed by Rajamanickam, IAS, for the government of Kerala and EMCC. The MoU reads that the government of Kerala will assist EMCC to invest Rs 5,000 crore for "Fisheries Research and Development". Chennithala alleged that the chief minister was hiding the conditions of the deep-sea fishing contract.

Talking to The Leaflet recently, Chennithala urged a judicial probe into the deal and demanded the resignation of Mercykutty Amma. "The minister was in a denial mode when I raised the allegations first on January 19. She had said that my allegations won't even stand for two minutes. Now, after five days, the government has cancelled the entire deal, which confirms that I am right," Chennithala said. He will also be holding a satyagraha at a fishermen's village in Thiruvananthapuram to demand the minister's resignation.

The Kerala government on February 26 stepped back from the decision to allot 4-acre land for EMCC.

Talking to the media, Kerala Industries Minister EPJayarajan said that " the decision has been made to avoid further controversy in the issue."

Meanwhile, EMCC president Shibu said on February 20, 2021, to a TV channel that "as the project is not in compliance with Kerala fishing policy, they have decided not to invest Rs 5,000 crore and just to go ahead with Rs100 crore project in the seafood processing unit."

It is obvious that there is more to this issue than meets the eye.

(Rejimon Kuttappan is a migrant rights researcher, multi-media journalist and author. The views expressed are personal.)