Its opponents are disunited, and the Central government wants to show it means business — so the giant Korean steel maker may be about to get a second chance in Odisha
After a long struggle of seven years, which saw more downs than ups, the $12 billion mega steel project of South Korea’s Posco in Odisha may be nearing the end of its ordeal.
Billed as the single largest foreign direct investment in the country, Posco has faced the ire of environmentalists as well as villagers who have to give up their land for the factory. Local steel makers never took kindly to its entry. Piqued by the project’s slow progress, the Pohang-based, New York-, Seoul-, Tokyo- and London-listed steel maker had even threatened to relocate the project to Brazil. Its experience is often cited by commentators when speaking of India’s inability to get large projects off the drawing board.
But things may be changing now. Some recent developments related to land acquisition and environment clearance, the two main hurdles, appear to mark a favourable turn for this beleaguered project.
A panel of the Union ministry of environment and forests has recently recommended re-validation of the green clearance granted to Posco by five more years till 2017. The recommendation, coming at a time when the environment clearance of the project is still under suspension by virtue of an order of the National Green Tribunal, reflects the attitude of the ministry towards the project.
Indeed, for the Manmohan Singh-led government, long pilloried for inactivity, getting the Posco project off the ground at last could be a clear signal to the rest of the world that it does mean business.
The National Green Tribunal, while suspending the environmental clearance of the project in March this year, had wanted an expert team to visit the site to assess the project’s environment impact afresh. During the tour of the project site, however, the team members conspicuously avoided visiting Dhinkia village, the epicentre of the anti-Posco stir, much to the dismay of the project’s opponents.
Sisir Mohapatra, a leader of the Posco Pratirodh Sangram Samiti, said: “The team did not visit Dhinkia, nor did it record our concerns about the possible environmental impact of the project. This raises the suspicion that the outcome of this half-hearted study is pre-determined”.
In its own defence, the team’s leader, former Union civil aviation secretary K Roy Paul, said that the mandate of the team was not to conduct any public enquiry. “We are here to see the geo-physical condition of the land. We will submit our report to the ministry by October”, he added.
But this wasn’t the only setback suffered by the Posco Pratirodh Sangram Samiti: it is grappling with serious discontent in its ranks over the functioning of its leadership that spearheaded the agitation against the Posco plant since the signing of the MoU with the Odisha government in June 2005.
The dissension was clearly visible when the activists from Gobindpur village, where the acquisition of residual land is crucial for starting work on the steel mill, formed a separate committee to decide their next course of action. Babuli Rout, a dissident leader, said: “We have lost faith in the present Posco Pratirodh Sangram Samiti leadership, as it is too dictatorial and not willing to take people into confidence in its decision-making.”
The formation of this new group within the Posco Pratirodh Sangram Samiti has further fragmented public opinion on the Posco site, which was earlier divided on the lines of pro- and anti-project. The United Action Committee, comprising of project supporters, is dominant in two panchayats — Nuagaon and Gada Kujang — while the Posco Pratirodh Sangram Samiti is dominant in the Dhinkia panchayat. This fragmentation, whether natural or engineered, could lessen resistance to the project.
Sensing an opportunity in this development, the Industrial Infrastructure Development Corporation of Odisha (Idco), the state-owned land acquisition agency, is readying plans to resume land acquisition for the steel project within the next couple of weeks, which was halted a year ago due to stiff resistance by the Posco Pratirodh Sangram Samiti activists.
Of the total area of 4,004 acres required by Posco, the government already has clear possession of 2,000 acres. The company has said that it can start work on the first two phases of the project, comprising 4 million tonnes each, if it is provided additional 700 acres, mostly in Gobindpur village. The dissension in the Posco Pratirodh Sangram Samiti could give Idco the opportunity to buy the required land.
Idco’s strategy to acquire the residual land in the Posco Pratirodh Sangram Samiti bastion is based on the formula of establishing contact with the people, redressing their grievances and implementing various developmental programmes to win over the villagers. The list of the developmental works lined up for the eight villages affected by the project and the surrounding areas includes construction of concrete roads, provision of drinking water, upgrade of schools, construction of surge protection wall, and assistance to self-help groups and panchayats, etc. The package is worth about Rs 250 crore, most of which is meant to be borne by Posco.
But the world’s fifth-largest steel maker is yet to agree to the proposal. “The government has not revoked the restrictions put on the entry of the Korean officials into the project site,” said a senior Posco official, reflecting the cautious approach of the company on this issue. “How can we contribute for such massive corporate social responsibility work without being able to enter the site? Besides, we have already spent about Rs 300 crore on the project without any progress. So what is the surety that it will move forward with this additional expenditure?”
Refuting this argument, a senior Odisha government official said: “When the company has earmarked an expenditure of Rs 1,650 crore for the improvement of environment and social development works, what is the harm in providing Rs 250 crore to carry out these welfare programmes in the affected villages?”
He was optimistic that Posco would come round. “We hope the company would see sense in making these initial investments to win the goodwill of the local people which will help in expediting acquisition of additional land to enable the company to start work on the project from October next.”
Meanwhile, the government is finalising the draft of a tripartite agreement with Posco and its Indian subsidiary, which will replace the MoU whose term expired in June 2010.
Among other things, the controversial iron ore swapping clause (use imported ore in the Odisha factory and export the high-grade ore mined in India) in the earlier MoU will be dropped in the new pact, which will also include new conditions like giving priority to locals in employment and setting up of ancillary and downstream parks.
But apart from land acquisition and the tripartite agreement, the Korean steelmaker faces certain problems that are beyond the purview of the state. This include cases pending in the Supreme Court over the grant of a prospecting licence for captive mine; these issues have to be resolved before the state can see the grounding of the $12-billion investment.
