Odisha to sign MoA for SPVs to facilitate steel projects in state

Reported by Chinmaya Dehury

Bhubaneswar, July 31:

The Odisha government will soon sign a tripartite memorandum of agreement (MoA) with Union Ministry of Steel and National Mineral Development Corporation (NMDC) for formation of special purpose vehicles (SPVs) for facilitating setting up of ultra mega steel projects in the state.

The SPVs, to be headed by NMDC and Odisha Mining Corporation (OMC), will acquire all government approvals required to start a steel plant and then hand them over to private companies to go ahead with project implementation, thus helping investors facing hurdles in setting up their projects in Odisha.

“We are coordinating with the Chief Minister’s Office (CMO). Once we get the nod of the chief minister, we will contact with the Steel Ministry and NMDC to ink the MoA. We are expecting that it would be signed soon,” said a senior official of steel and mines department.

The steel ministry wants to roll out the SPV model in four mineral-rich states: Karnataka, Odisha, Chhattisgarh and Jharkhand.

The official also informed that the Ministry had made some suggestions, including state PSU IDCO’s participation on behalf of the state in the project SPV due to its capabilities in land acquisition, infra linkages and obtaining clearances.

As per the steel ministry plan, NMDC and the state agency will do the land acquisition and get statutory clearances like environment and forest and also ensure iron ore linkages for the project. The steel SPV project will then be auctioned out to steel companies, while NMDC and the state agency will retain the mines.

The Odisha government also suggested formation of project specific SPVs for better management.

“The proposed holding company (JV with NMDC and Odisha government) to oversee all the projects in the state, may not be required as such a proposal would have been advisable in case there would have been multiple projects and 2nd tier SPVs (project specific SPVs) as in case of PFC for UMPPs which has multiple SPVs across the country. Therefore, it is suggested that we may have only project specific SPVs,” said the Odisha government in its suggestion.

It also said that SPVs proposed with SMDCs would be critical for establishing mining linkage for the project, which would be as crucial as land and other statutory approvals.

“It is important to ensure that adequate mineral linkage support is provided in favour of project SPV with firm and assured supply arrangements and pricing. Absence of assured mineral linkage would not result in making the proposal attractive resulting in poor response from the market at a later stage. However, it is suggested that the project SPV may not be entrusted with the activity of arranging mineral linkage as such activity may dilute its effort for timely fulfillment of its objectives – land, infrastructure and clearances,” said the government.