Putting all speculations at rest, the Industrial Promotion and Investment Corporation Ltd (Ipicol) of the Orissa government has recommended renewal of MoU with Posco India for its 12 million tonne steel project in the state.
The initial tenure of this high stake MoU, signed between the South Korean steel major and the Orissa government in 2005, had expired on June 22, 2010.
With Posco’s Rs 52,000 crore project, billed as the biggest foreign direct investment (FDI) proposal in the country, yet to take off the ground even after five years of signing of the MoU, speculation were rife about renewal of the agreement.
Fuelling these speculations was a disqualification clause in the original MoU. The relevant clause said, “The MoU shall remain valid for a period of five years from the date of signing. Further extension, if necessary, shall be made as per mutual agreement”.
“However, no extension shall be considered unless the company has made substantial progress on implementation of the project in terms of construction, erection of plant and machinery and investment at the site to the satisfaction of the state government in these five years in implementing the first phase as envisaged in this MoU”, it said.
With Posco not being able to acquire an inch of land, leave alone construction or erection of the plant, the government was in a tight spot to justify renewal of the pact.
In this backdrop, the state government had sent the Posco’s application for renewal of the MoU, submitted on June 8, to the state-owned Ipicol for vetting and comments.
While recommending renewal of the MoU, Ipicol has said, there was nothing to doubt the intention of the company to set up the mega steel plant in the state as it has already spent substantial money on the project till date. However, the company has been unable to make progress on the ground because of problems in land acquisition which is a joint responsibility of the company and the government.
In fact, the government, through the MoU, is committed to provide encumbrance free land to the company.
The government is expected to take final decision on renewal of the MoU soon on the basis of the Ipicol’s recommendation.
Sources said, the government is unlikely to change the broad terms and conditions of the MoU during renewal and may only incorporate a clause which will make it mandatory for the steel major to set up an Industrial Training Centre (ITC) and absorb locals in its project.
The mega project needed 4004 acres of land in three panchayats, Dhinkia, Gadakujang and Nuagaon, in Jagatsinghpur district. This included around 2900 acres of forest land. While the project has received the Centre’s approval for diversion of forest land, the state government has recently suggested to Posco to give up 300 acres of private land at Dhinkia in the wake of stiff protests from the villagers there.
The socio-economic and horticultural survey for the project, which was underway in the site to find out the loss of assets of the local villagers and estimate the compensation package, has been completed recently and the district administration has submitted the survey report to the state government today.
