Miles to go for Odisha’s industrial growth

By Chinmaya Dehury

Bhubaneswar, Dec 3:

Odisha may have attracted staggering investments of Rs.14 lakh crore (Rs.14 trillion/$226 billion) next only to Gujarat, but there is no substantial progress on the ground – the most glaring example being the $12 billion Posco steel plant – as many of the projects are mired with various impediments.

While several projects are facing resistance of the local people over land acquisition and inadequate compensation, many are entangled in getting clearances. Even though some projects have been successfully set up – like Vedanta Alumina – the government has failed to provide raw material for the plants.

Of the total investments since 1991, the bulk of it in metals and mining, Rs.8 lakh crore has come in 2000-2014 (till March).

A RBI report last September pointed to Odisha as the hottest investment destination for new projects, attracting 27 percent of what the entire country received.

However, the state government has failed to capitalise on the large-scale investments, forcing some entities to withdraw. While Arcelor Mittal has already scrapped its Rs.40,000 crore steel project, Jindal Steel and Power recently scrapped its Rs.62,000 crore coal-to-liquid (CTL) project at Angul following the recent cancellation of the Ramchandi mine by the Supreme Court.

“The Odisha government has signed memoranda of understandings (MoUs) with 92 companies in the last 15 years while only 41 industries have started partial production so far. Out of the projects, 35 steel plants, three power plants, one each in aluminium, cement and auto-ancillary plants, have started partially production,” said Industry Minister Devi Mishra in a written reply in the assembly.

What stands out in all this is Posco India, touted as the country’s largest foreign direct investment (FDI) , that is mired in controversy for the last nearly 10 years due to stiff local opposition over compensation and environment concerns.

Following stiff resistance over land acquisition, the South Korean company decided to execute the plant in a phased manner. The ministry of environment and forests has given its clearance for setting up a four-million tonne per annum (MTPA) integrated steel plant in the first phase. However, the original plan of setting up of a 12 MTPA steel plant has remained unchanged and intact.

The government has already acquired 2,700 acres of land for the first phase. The company requires 4,000 acres of land for the entire project.

Ironically, the project has not moved forward even after then prime minister Manmohan Singh said in Seoul in March 2012 during a state visit to South Korea that progress would be achieved.

In the steel sector, out of Rs 222,862.63 crore investment proposed in 50 projects, Rs. 109,638.90 crore has been invested till today, said Mishra. Then, Rs.66,444 crore has been proposed in the aluminium sector by three companies – Vedanta, Aditya Aluminium and RSB Metaltech.

Most of the power, aluminium and steel projects are facing land acquisition hurdles and shortage of raw material.

“The industries are facing land acquisition hurdles and shortage of raw material, affecting the industrial environment in the state. The state government must address these issues for economic growth,” Utkal Chamber of Commerce and Industries (UCCI) president Ramesh Mahapatra told IANS.

In the energy sector, independent power producers (IPPs) have invested Rs.32,991 crore on proposed coal-fired projects after entering into MoUs with the state government. Among the 28 power companies, only three – Sesa Sterlite, Jindal India Thermal Power and GMR Kamalanga Energy Ltd – have commenced commercial production in the last 15 years.

The IPPs have a combined capacity of 37,000 MW.

Despite Odisha attracting 12 percent of the new investments in the country’s power sector, the projects are facing inordinate delays. The cancellation of coal blocks by the apex court has also affected the projects.

However, even though there is no visible industrial growth in the state, more than 60,000 acres of land has been acquired for industrial purposes. Most of this is lying unused and some industries have mortgaged the land to get loans from banks.

For the record, Odisha has about 28 percent of India’s iron ore, 24 percent of coal, 59 percent of bauxite and 98 percent of chromite. Over a million youths – of whom nearly 100,000 have technical qualifications – are jobless, a situation that could have been easily rectified had all the proposed projects come through. ((IANS)

(Chinmaya Dehury can be contacted at [email protected] )