India today drew flak from a visiting South Korean minister over the continued delay in implementing the $12 billion Posco steel project in Odisha, prompting New Delhi to assure Seoul that it would review the matter. The issue might come up in the first meeting of the newly constituted Cabinet Committee on Investment (CCI), slated for this month end, those in know of the development said.
Meanwhile, a delegation of Abu Dhabi-based carrier Etihad Airways, which is expected to buy stake in Jet Airways, will meet Commerce and Industry Minister Anand Sharma on Thursday.
Sharma also indicated that a greater clarity will be given to British retailer Tesco on sourcing requirements.
The issue of south Korean steel major Posco, which will bring the largest foreign direct investment into India, figured in a bilateral meeting held here between Sharma and visiting South Korean Minister of Knowledge Economy Sukwoo Hong on the sidelines of the Global Partnership Summit organised by the Confederation of Indian Industry here.
"We have been concerned about the delays and will be conducting a review. Prime Minister (Manmohan Singh) himself has been monitoring this project," an official statement quoted Commerce and Industry Minister Anand Sharma as saying to South Korean Minister of Knowledge Economy Sukwoo Hong.
Those in know of the development told Business Standard that the South Korean side was categorical in asking India to sort out the hurdles in way of the Posco project, before discussing any other issues.
They also said if Prime Minister Manmohan Singh agrees issue is likely to figure in the first CCI meeting, scheduled to be held on January 31. CCI has been set up to sort out issues relating to stuck up mega infrastructure projects costing above Rs 1,000 crore.
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The fate of Posco project with a capacity of 12 million tonnes per annum steel in Odisha's Jagatshignpur has been hanging in balance since June, 2005. However, land for the project has not yet been fully acquired due to opposition from the local people.
According to POSCO India's website, the project has now been divided into three phases of 4 MTPA each.
"Phase I is expected to conclude in 2016-17. Phase II will be completed three years after completion of Phase I and Phase III will be commissioned within three years after Phase II," the website said.
Of this, the first phase is estimated to cost $3.7 billion (Rs 16,650 crore), it added.
For 12 MTPA steel plant, POSCO required 4,004 acres of the land. However, after Odisha government expressing its inability last year to transfer the entire land in one go, the company decided to scale down the plant size to 8 MTPA initially and now needs about 2,700 acres of land. The Odisha government is believed to have acquired 2,100 acres of land so far for the project. The South Korean steel major also requires green clearances for the project.
On March 30, 2012, the National Green Tribunal had suspended the green clearance granted on January 31, 2011, to the much-awaited project on not seeking clearance for the entire project. The Posco project also includes iron ore mine development over 30 years (total 600 million tonnes) at captive mines located in the Keonjhar and Sundergarh districts of Odisha and development of related infrastructure. The company requires 20 MTPA iron ore for annual steel production of 12 million tonnes over 30 years.
On a delegation of Etihad, Sharma said,"They are meeting me on January 31."
The meeting comes in the backdrop of Jet Airways stating earlier this month that it was in talks with Eithad regarding a potential investment by it in the Naresh Goyal-owned carrier.
The issue is also understood to have come up during the bilateral meeting Sharma had with UAE Foreign Trade Minister Sheikha Lubna Bint Khalid Al Qasimi here.
Jet is likely to sell 24% of its equity to the major Gulf carrier, unconfirmed reports said, indicating that crucial issues relating to the stake sale have been sorted out between the two airlines.
Recently, Jet Airways informed the Bombay Stock Exchange that Jet and Etihad were in discussion regarding a potential investment by the latter in the former.
If it goes through, this could be the first investment by a foreign carrier in an Indian airline following the liberalisation of the FDI policy in aviation to allow foreign airlines pick up stake in Indian carriers.
When asked whether he could convince the Uttar Pradesh government to support FDI in multi-brand retail, Sharma said it is a policy enabling framework where state governments have a choice whether they want to be benefited or not. "This was an executive decision. UP as a state can benefit from this," he added.
On the stuck-up Free Trade Agreement between India and the European Union, he exuded confidence that it would be inked soon.
When asked about his meeting with Tesco chief Sir Richard Broadbent in Davos who asked greater clarity of the FDI policy, Sharma said when policies are made they would naturally require greater clarity. "In relation to sourcing we will see if a particular investment is coming in one state, whether sourcing has to be done from that state only."