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'Development on Rs 52K cr Posco proj likely only after polls'

Last Updated: Sunday, March 23, 2014 - 18:54

New Delhi: The wait for South Korean giant Posco to start its Rs 52,000 crore Odisha steel project, involving the largest-ever FDI in India, may get longer as the state government is not expected to transfer the required land to it till after the Lok Sabha polls are over in Mid-May.

The steel maker secured environmental clearance in January for its 12 million tonne (MT) plant, ending eight years of wait for the project.

However, a source said: "There is no progress on the project as the state government has not transferred remaining 1,000 acres to Posco.

"Now, considering the elections, we assume there is not going to be any development shortly."

During a review by the Steel Ministry this month to know the fate of major projects, Posco had expressed inability to start work on the steel-to-port project at Jagatsingpur in the absence of adequate land.

The steel giant had inked a pact with the Odisha government in June 2005 to set up the integrated steel plant and port project on 4,000 acre in the coastal town of Jagatsinghpur. It needs 2,700 acre to commence work on the first phase, while the state government has already transferred 1,700 acre to it.

"Acquisition of the balance 1,000 acre?is ending with the state government. Renewal of Memorandum of Understanding is also pending with the state government," a Posco official told the ministry during the review meeting on March 10.

The steel project had received initial clearance from the Environment Ministry in 2007 and final approval was granted in 2011. The National Green Tribunal (NGT), a quasi-judicial body, suspended the permit in March 2012 citing environmental concerns.

However, in January it obtained the clearance with a condition that Posco must spend 5 percent of its total investment on "enterprise social commitments", which will push up cost by USD 600 million (over Rs 3,600 crore).

A company official meanwhile expressed hope of a lease agreement with the Odisha government soon so that the work on initial 4 MT plant could start after the general elections.

As per Posco, if everything goes as planned, the Phase 1 of the project might be commissioned in 2018; Phase II will be completed three years after completion of Phase I, and Phase III will be commissioned within three years after Phase II.

Last year, facing inordinate delays in land acquisition and local opposition, Posco scrapped its proposed Rs 30,000 crore project in Karnataka.

PTI
First Published: Sunday, March 23, 2014 - 18:54
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