Odisha has no info on Posco backing out of Paradip project

Odisha Sun Times Business Bureau
Bhubaneswar, Apr 2:

A leading international portal has reported that South Korean steel major Posco is backing out of its mega steel plant project at Paradip in Jagatsinghpur district of Odisha.

“Posco is backing away from a planned $ 12 billion steel complex in India, which has been stalled by local disputes and lease issues since it was proposed a decade ago,” leading business site blommberg.com reporetd quoting ‘people familiar with the development’.

The Odisha government has, however, said it has no knowledge of the Korean giant backing out. “I have no information on this. If there was something like this, my officer would have definitely told me about it,” Steel and Mines minister Prafulla Mallick told OST over phone from Belpahar.

The Bloomberg report also claims that Posco India has sought a refund of the money it had paid to state PSU IDCO for land and to Haridaspur-Paradip Railway Company towards its share of the rail project that would have facilitated the transport of iron ore from the Banspani-Tamka belt to its proposed plant in Paradip.

“In a letter sent to Haridaspur Paradip Railway Co. earlier this month, Posco India has sought a refund of 275 million rupees ($4.4 million) paid in 2006 for a 10 percent stake in the rail infrastructure firm mandated to lay the tracks, according to two people. Posco has also asked the Odisha Industrial Infrastructure Development Corp., or IDCO, to return money paid for the lease of seven acres of land, which has remained pending, according to two people and a separate letter to IDCO,” bloomberg.com said.

“Vishal Kumar Dev, chairman and managing director at IDCO, declined to comment on the letter received by the corporation. The company hasn’t indicated that they are “abandoning the project,” Dev said in a phone interview,” it went on to add.

The report also quotes Posco spokesperson IG Lee explaining away the resignation of six out of the 13 employees at Posco Iindia, who were overseeing the Odisha project, as ‘voluntary’.

Lee, however, said he had no knowledge of the company seeking a refund.

The rethink on the Odisha project on the part of the Korean steel maker’s top honchos is believed to have come about after the decision of the NDA government to auction all mines. This meant Posco would have had to bid for the sumptuous Khadadhar irone ore mines in Sundargarh district, which it had taken for granted, to source raw material for its Paradip plant.

Going by the trend in the recent auction of spectrum and coal blocks, an open bidding would have meant spending substantially more than Posco had earlier bargained for, making the project unviable in the process.

Even if the company was ready to spend the money and get the mines, there was no guarantee that it could start mining anytime soon since it is a Scheduled Area, which enjoys special protection under the Constitution in the form of PESA.

The fate of Vedanta in Niyamgiri, another tribal area, obviosuly did not inspire much confidence in Posco. As in Niyamgiri, a strong tribal movement is already building up in the Khandadhar area. The fact that the agitation enjoys the backing of local MP and Union Tribal Affairs minister Jual Oram made the odds even more formidable for the Korean company.