New dredging sites to be allotted through open auction system

Rinzin Wangchuk 

Amid controversies surrounding surface collection and river bed materials (RBM) dredging for export in Samtse, the Cabinet has issued a clarification to streamline the renewal of clearance for ongoing activities.

One of the major decisions the Cabinet made was related to the re-allotment of a dredging site in Titiring to SSD Ventures, which was denied for the last two years, and allotment of a new site directly to Chephen Nordup Export in Lori Khola, both in Tading gewog, Samtse.

In his letter to the minister of agriculture and forests on December 30, 2021, Cabinet Secretary Sangay Duba conveyed the directive of the Cabinet to the Ministry of Agriculture and Forsts (MoAF) and Department of Forests and Park Services (DoFPS) to assess and establish a “fair reserve price” for the site allotted earlier to SSD Ventures in Zone C, and re-allot it for three years, after which the site will be auctioned openly.

The decision came after the proprietors of SSD threatened to sue Lyonpo Yeshey Penjor and Director of Forests Lobzang Dorji, and claim compensation for the loss of  Nu 60 million (M) due to  “unfair treatment”.

“We are now relieved after running from pillar to post over the last two years,” one of the SDD proponents said. “We were deeply concerned as to how we are going to recover Nu 60M invested in crushing machines that remained idle for more than two years.”

The Cabinet also directed MoAF and DoFPS to assess and establish a “fair reserve price for the site proposed by Chephen Nordup and allot the site for a period of three years.

“The same site shall be put on open auction after three years,” the Cabinet Secretary stated in the letter.

Direct allotment to Chephen Nordup, according to Sangay Duba, was considered as a special case since the proponent refused to provide no objection clearance for his privately-registered land that falls in the proposed dredging area.   


Cabinet’s inconsistent decisions

The Cabinet’s recent order supersedes previous directives issued pertaining to dredging and export of RBM. Prior to the recent directive issued, Sangay Duba wrote to the minister of agriculture and forests on November 8, 2021, regarding not allowing new dredging in the same site (Zone C) to SSD Ventures unless it acquires it through open auction.

However, SSD was permitted to clear balance stock materials within a time period decided by the ministry.

SSD Ventures, jointly operated by Sherub and Sonam Dema, was denied the renewal of the environment clearance (EC) by DoFPS after the expiry of their EC in September 2019, although there was a Cabinet order to continue the ongoing activities.

Taking the way forward for surface collection and dredging, former Cabinet Secretary Kesang Wangdi wrote to Lyonpo Yeshey Penjor on July 26, 2019 conveying the government’s decision to allow ongoing surface collection and dredging activities on allotted sites to continue and that the DoFPS would renew the clearances.

“A separate EC is not required from the National Environment Commission Secretariat (NECS) in continuation of past practice as the DoFPS is the competent authority,” the letter stated. “Feasible sites, if any, will be allotted to the new applicants by the DoFPS following due assessments.”

The letter also stated that every forestry clearance issued to the applicants must state that the clearance is valid until the Mines and Minerals Bill is enacted by the Parliament and comes into force.

However, the DoFPS did not renew EC for SSD Ventures, although the company secured no-objection clearances from the community, received approval from the Samtse dzongkhag administration, and had a renewal recommendation form the forest territorial office. SSD Ventures got approval for dredging of RBM from the state reserved forest in 2018 for a period of one year.

The government, however, reversed its decision within a few months and ceased collection and export of RBM from the Toorsa river basin.

The MoFA issued a notification on October 25, 2019 that ongoing dredging and export clearance/permit holders, government, as well as private operators, should cease upon expiry of the validity of the given export deadlines.

Authorities were notified not to issue permits, approvals, or clearances for surface collection and dredging of sand and boulders, either from riverbeds or elsewhere without consultation with the DoFPS.  The notification was issued to safeguard proper management of the country’s scarce natural resources and ensure proper monitoring of the activities.

Reversing the earlier Cabinet decision to stop allotment of new dredging sites, the 78thsession of the third Lhengye Zhungtshog held on November 17, 2020, decided that MoAF could allow Druk Magical Private Limited (DMPL) to dredge from the identified 7.5 acres site at Zone C if there are feasible deposits and if transportation accessibility could be arranged with SSD Ventures and Phuentsholing Thromde Development Project (PTDP).

No other sites within Zone C were allotted for new dredging. All other new sites identified by the DoFPS, feasible to undertake dredging, were decided to be allocated through an open auction.

The Cabinet directed the MoFA to develop clear auction guidelines, spelling out a timeframe (definite dates) for start and end of operations by the successful bidder.

The Cabinet, however, contravened its own decision and asked the MoAF to engage in discussions with Chephen Nordup Export and permit the company to dredge at the average auction rate per acre established by the ministry. The directive was issued to Lyonpo Yeshey Penjor in writing by the Cabinet Secretary on November 8 of last year.

In the earlier interview with Kuensel, forestry officials said that no auction was held in the past to award dredging sites and they are left wondering what the average auction rate is or would be.

The 104th Lhengye Zhungtsho held on October 19 also directed MoFA to assess the dredgeable/feasible sites in Zone C of PTDP and other feasible sites at Tading and Lhamoizingkha and auction those feasible sites. It was also decided that the sites already allotted to companies before the application of the open auction system shall continue for three years if an average auction rate per acre, including other provisions decided by the ministry, are agreed to by the company.

The recent Cabinet order also stated that all new dredging sites identified by the ministry will be allotted under the open auction system.

However, the ministry has to assess and establish a fair reserve price for each of the already allotted sites to companies before application of open auction and re-allot them for three more years, after which the sites shall be put on open auction.

“Such processes shall be applied the same to the sites allotted to the Natural Resources Development Corporation Limited (NRDCL) as well,” Cabinet Secretary stated. “The NRDCL shall surrender their dredging site at the end of the three years and participate in an open auction.”

This decision was taken during the 108th Lhengye Zhungtshog held on December 21 last year.

The Cabinet’s decisions were taken based on proposals submitted by the ministry. Sangay Duba said that there is no confusion. “Before implementing the directives, MoAF sought clarification and the Cabinet clarified accordingly, which superseded the earlier directives.

“The change is only from an auction rate to reserve pricing, since there is no average auction rate for RBM.”

Dredging controversy

Awarding of two dredging sites in Titiring and Lori Khola to DMPL and Chephen Nordup is mired in controversies.

Aggrieved by the government’s unfair decisions, two representatives of the five proponents on January 3 appealed to the Anti-Corruption Commission (ACC) to investigate a “possible collusion and policy corruption” in the award of dredging sites.

“We wanted fair justice and equal opportunities like DMPL and Chephen Nordup,” one complainant said.

Five proponents were among 12, including DMPL who applied for a dredging site in Titiring to the government in 2018.  One aggrieved applicant said that all of them applied for the sites together but could not understand why DMPL was given the privilege. “I think the ACC, which was also responsible for awarding the dredging site to DMPL, could intervene and curb policy corruption before it is too late.”

Some proponents also questioned the direct allotment of the site to Chephen Nordup without following due process.

“Here due process means an open auction was not held as announced by the Cabinet,” one said.

One aggrieved proponent also said that ACC should also look into whether the proponent’s private land as clarified by the Cabinet falls under the proposed dredging site in Lori Khola. “If so, it will be construed as a misuse of power by the Cabinet,” he said.

Clarifying on this allegation, Sangay Duba said that although he hasn’t been to the site he learnt the private land is included in the total area demarcated for dredging which was more than 21 acres.

“Leaving out a private area meant that a dredging site would become uneconomic,” he told Kuensel.

Lyonpo Yeshey Penjor in an earlier interview said that the identified feasible dredging site is located adjacent to Chephen Nordup Export’s private land and the proponent was not willing to give clearance if any other company wanted to do the job.

“Therefore, the Cabinet was compelled to let the proponent dredge from the state reserved forest land instead of keeping it idle,” he said.

Kuensel tried to contact Chephen Nordup’s partner, Tashi Rabten of NTT in Phuentsholing, but he refused to comment.

Proponents accused the government of supporting two promoters of Druk Nyamrup Tshogpa.

“There wouldn’t be a biased distribution of dredging sites if I were the sibling of one minister,” said one proponent who applied for dredging sites in Titiring and Purbey Khola.

Gawa Yarphel Construction’s proprietor, Pema Khenrab, also said that he is unhappy with the dredging site allotment. “Two dredging sites were announced under Gedu forest,” he said. “I had all the clearances, but I didn’t get them.”

Pema Khenrab said he applied at the time when three dredging sites were announced in Samtse and Gedu. However, the Samtse dredging site was allotted to Druk Magical and the Gedu site was not allotted.

“How is this possible?” he asked.