Closure of Birla Tyres unit in Balasore, Reliance polyester fiber unit in Dhenkanal and couple of steel projects in Kalinga Nagar industrial hub, Jajpur, mark the end of 2008 in Orissa which otherwise started the year on a high note of being at the top of all states in attracting investments in the country.
Closure of these units has resulted in loss of over 5,000 jobs both in the permanent and temporary category and the situation is predicted to be even worse in the first half of the coming year.
Orissa, so far, has attracted over Rs 6 lakh crore of investment, most of it in the field of steel, aluminium, cement, power and port development. The state has signed 75 MoUs for projects across these sectors in last five years.
But the investment scenario in the state, particularly in the second half of 2008, lost most of its shine thanks to the impact of the global meltdown, slow pace of implementation of major projects like those proposed by Posco, Arcelor-Mittal and Tata Steel. All these major projects suffer from local opposition to land acquisition, delay in allotment of captive mines and moreover, lack of pro-active support from the administration, which has already gone into election mode with the assembly polls round the corner.
While recommendation of prospecting licence for mines sought by Posco still hangs fire, Arcelor-Mittal, which proposes a 12 million tonne steel plant, same as Posco’s, in Keonjhar district has missed the June deadline to submit the detailed project report. Tata Steel’s start of work at Kalinga Nagar has jumped several timelines set during the year awaiting clearance of the site from encroachment. These 3 mega projects together envisage 30 million tonne steel capacity at an estimated cost of Rs 1,20,000 crore, a fifth of the total investment lined up in the state.
Out of 49 MoUs signed in the steel sector, 28 have gone into partial production. However, most of them are now in a moribund state due to slump in steel demand, price fall and relatively high input cost. In the Kalinga Nagar steel hub, all the eight steel units including Nilachal Ispat, Mesco Steel, Jindal Stainless Steel, VISA Steel and Maithan Ispat have substantially reduced their operations resulting in separation of an estimated 3000 jobs. The repeated pleas of steel makers, without captive mines, to state-owned raw material supplier, Orissa Mining Corporation (OMC) to reduce iron ore and chrome ore price to help them tide over the crisis has not yielded any result.
On aluminium front, except for Vedanta aluminium, none of the other projects proposed by Hindalco and L & T has made progress even as the alumina project of Utkal Alumina International Ltd, a Hindalco company, continues to be jinxed by local agitations. However, Vedanta’s Rs 4,000 crore alumina plant in Lanjigarh and Rs 8,400 crore aluminium and power complex in Jharsuguda have headway with commissioning of the units. The public sector Nalco, which was accorded Navratna status during the year, has come up with a proposal to set up its second aluminium project in the state with captive power generation facility at Brajarajnagar at a cost of Rs 16, 345 crore.
In the power sector too, the independent power producers (IPPs) have been unable to achieve any substantial breakthrough with the projects grappling with problems like land acquisition and securing coal linkages. The Orissa government had inked MoUs with as many as 13 IPPs with investments worth Rs 65,886 crore.
The economic downturn has also taken its toll on the IT companies which have delayed the construction work of their purposed projects in Orissa. While Wipro Technologies has deferred its development centre by two months, MindTree Consulting and Genpact have also delayed their construction work by nearly three months. However, Tata Consultancy Services is set to inaugurate its development centre by January 4.
Meanwhile, the industrialists fear that with the elections to the state assembly likely to be held in April, along with the Lok Sabha polls, the industrialization process in the state will further slowdown, particularly with respect to mega projects entangled in land acquisition, mining lease and forest clearance rows such as those of Posco’s, Mittal’s, Tata’s, Vednata’s or Hindalco’s. “We do not see anything remarkable to happen or any pro-active support from the government to big projects tills the end of the assembly polls”, said an industrialist, adding, that is besides the general atmosphere of gloom which affects the industrial sector now.
