Odisha Goverment demands Posco to clear stand on steel project

27 April 2015

As Posco has been dillydallying over payment of dues towards the cost of the land acquired for its proposed mega steel plant near Paradip, the state government today said, the Korean steel maker must make its stand clear whether its wants to set up the plant or not.

“We are ready to provide raw material to Posco as per our linkage policy. Posco must clarify its intention whether its wants to set up the plant or not,” said Prafull Kumar Mallick, steel and mines minister with the state government.

The linkage policy states that the state government would provide iron ore to the steel plants which do not have captive mines through the state-run Odisha Mining Corporation (OMC) by means of long term supply arrangement.

Posco has been showing lack of interest over setting up the steel plant at the proposed site ever since the Union government made it mandatory that every steel maker aspiring to have captive mining rights will have to participate in an auction process if it did not have a letter of intent sent by the state government in its favour before the promulgation of MMDR (Amendment Ordinance) on January 12.

As the things stand, the state has neither sent any such letter of intent nor renewed the MoU, that promised the company raw material linkage, before the promulgation of the ordinance. Even the recommendation for grant of prospecting licence for Khadhadhar iron ore mines to Posco was not complete in nature.

In this backdrop, the hopes of Posco getting captive mine on preferential route has evaporated. With the Korean steel firm indifferent to the idea of taking part in auction for mining lease and also not keen to buy iron ore from OMC at the market rate, the doors on its project in Odisha have virtually been shut considering its assertion that “no captive mines no project”.         

Meanwhile, the loss of hope of owning a captive mines has led to payment issues between the state government and Posco. The state-run Odisha Industrial Infrastructure Development Corporation (Idco) recently 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. The land acquisition got completed in 2013.

The project required 4,004 acres for 12 million tonne plant capacity. The proponent later redesigned the project, planning to set up eight mtpa plant in the first phase which needed 2,700 acres.

Though Idco had acquired over 2,700 acres of land to facilitate setting up of an eight million tonne steel plant by Posco 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.

But refusing to be bogged down, Posco has turned the heat on Idco. In a letter to Idco, it has sought details of the expenditure of Rs 30 crore it paid to Idco earlier. The money was paid for uprooting of betel vines at the project site (Rs 23 crore), establishment of police base camp (Rs 74 lakh), road construction (Rs 1.35 crore) and land acquisition in nine villages (Rs 5.23 crore).

In a separate letter, Posco has demanded refund of Rs 11.21 crore it paid for acquisition of 438 acres of private land. The steel firm claimed to have deposited Rs 13.52 crore for this purpose. Private land acquisition for the project was abandoned due to stiff opposition of the locals.