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Still optimistic on the future of the mega steel mill, the state government is toying with the idea of bringing Posco India on the talking table to discuss threadbare the company's intent.
"Posco needs to crystallise its position on the Odisha project. The government is still under a cloud with respect to the Posco project since we have not received any clear communication from the company. We are mulling to invite them for negotiations so that clarity emerges", said a highly placed source.
While the state government does not view Posco project going the ArcelorMittal way, industry observers believe the steel major has already signalled its possible exit. ArcelorMittal aborted its Odisha steel project, also of 12 million tonne capacity, in 2013 citing huge delay in land acquisition, uncertainty in allocation of iron ore deposits and law and order issues.
Inordinate delay in land acquisition and the row over iron ore deposits also pushed the Posco project to the backfoot since it signed the memorandum of understanding (MoU) with the state government in June 2005.
For Posco, the latest nail in the coffin came with the enactment of the amended Mines and Minerals (Development & Regulation) MMDR Act, 2015 that ruled out grant of any mining lease to the company.
ALSO READ: Posco's Odisha journey: Travails of a big-ticket project
While many analysts billed the MMDR Act as the end of the road for Posco, its chairman stunned all with his announcement Wednesday in Seoul. "We decided to tentatively stop the project as we have not seen visible progress. The project will remain at all stop unless the Indian government offers a better deal", said Posco chairman Kwon Oh-joon.
Posco also said it would shut down unprofitable local and overseas businesses as part of its restructuring plan since global demand for steel remained subdued.
Within the state government, Posco still remains a committed investment.
"Media reports suggest Posco has kept its project under suspension and has not withdrawn. They have not communicated to us regarding their plans to put on hold the Odisha project. We have acquired 2753 acres land for the Posco project out of which 1703 acres have been acquired", said industries minister Debi Prasad Mishra.
The minister said Posco has to pay off the arrears amounting to Rs 86 crore towards land acquisition and net present value (NPV) of dereserved forest land so that the balance land can be transferred to the company.
The state's land acquisition agency- Odisha Industrial Infrastructure Development Corporation (Idco) had raised a demand of Rs 95 crore towards land acquisition cost. Out of this, Posco India has paid Rs 54 crore, leaving an arrear of Rs 41 crore.
Asked if the government was open to hand over the acquired land to other industries, he said, "We will consider that option if Posco formally announces its exit from the Odisha project or commits further delay in developing the land."
Posco India in the meantime, has surrendered around 7,300 sq ft of its office space in Bhubaneswar. The steel company is now operating out of 5000 sq ft facility compared to 12,300 sq ft allotted to them originally.
"Due to several issues, the Odisha project is on hold. However, the project is still on. As regards reducing the office space, there has been no progress in the project over past 2/3 years. Much of the office space was lying vacant. Therefore, it was decided to renovate the office space to a smaller area for cost efficiency", said a company source.
While the steel maker has surrendered a sizeable chunk its rented space, it is understood to have sought three months extension for start of construction on its proposed office building in the city- a development which has not only baffled the sceptics, but also ignited a ray of hope for the state government.
