Odisha making effort to retain Posco project

13 May 2015

The Odisha government is making all efforts to see that Posco's proposed steel plant comes up in the state, said Chief Minister, Naveen Patnaik here today, brushing aside speculation that the South Korean steel major is backing away from the project.

"I do not think so. As you know our government is trying very hard to see that the Posco project is set up," he said, after returning from a visit to New Delhi. Several government officials and industry insiders have indicated that Posco has been dragging its feet over going ahead with its proposed 12 million tonne steel plant in Odisha ever since the new MMDR Act made it incumbent on the company to participate in the auction process to get captive iron ore mine, ruling out the possibility of preferential allotment of mines.

The company had signed a MoU with the Odisha government in 2005 to set up a 12 million tonne steel plant on the assurance of preferential allotment of captive mine. The state government, has already said that it will work out a plan to provide raw material to the steelmaker after the change of rules, by providing linkage facility from Odisha Mining Corporation (OMC), a state government PSU.

Speculation of Posco's withdrawal from the project had gained momentum following a recent exchange of letters between the steel major and state land providing agency.

Last month, the Odisha Industrial Infrastructure Development Corporation (Idco) demanded that the company must pay Rs 54 crore towards land premium and Rs 19 crore towards net present value (NPV) for forest land diversion.

Though Idco had completed acquisition of 2,700 acres of land in 2013 to facilitate Posco set up an eight million tonne steel plant in the first phase, only 1,700 acres has been transferred to the company. Idco had withheld hand over of the balance 1,000 acres, citing that Posco was yet to clear the land dues and the NPV.