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Surya Vijayanagar Steel withdraws Rs 24,000 cr project in Karnataka

Mahesh Kulkarni  |  Chennai/ Bangalore 

Even as the Karnataka government is going ahead in full steam to hold its second global investors’ meet (GIM) in June this year, some of the big-ticket investors in the steel sector that signed MoUs at the first GIM in 2010 are losing interest in investing due to delay on the part of the state government in allotting land and ban on mining.

While the government is still undecided on allotting land to South Korean steel major Posco at Halligudi in Gadag district due to opposition from farmers, another steel producer, Limited, a subsidiary of Surya Roshni Group, makers of light bulbs, tube lights and GI pipes, has withdrawn its proposal to set up a 6 million tonne per annum steel plant and 500 Mw captive power plant. The reason cited by the company for withdrawing its proposal is ban on mining in Bellary district.

The company had proposed to invest Rs 24,000 crore in its steel and captive power plant in Bagalkot district. The state high-level clearance committee headed by the chief minister had approved the investment proposal of the company. It had planned to set up the plant in Bagalkot district with water required for the project coming from Ghataprabha and Krishna rivers.

The chairman and managing director of the company had written a letter to the state government in June last year informing the decision of the board to withdraw their investment proposal owing to ban on iron ore mining. They also requested for refund of their initial deposit of Rs 52.80 crore towards the land acquisition cost. The government has accepted their request and approved their request to withdraw from the state, official sources told Business Standard.

Recently, the government has issued an official notification giving its consent to the company to withdraw their proposal.

Meanwhile, the state government has completed acquisition of 2,600 acres at Kuditini village in Bellary district for the 6 MTPA steel plant of India. It, however, is yet to inform Posco that it has dropped Halligudi in Gadag district due to massive protests from the farmers for the project. In July last year, the then chief minister BS Yeddyurappa had announced that the government would not go ahead with the acquisition of land in Halligudi for the steel project.

Sources in Posco India confirmed that the government was yet to inform them officially about the dropping of Halligudi from land acquisition and indicate a new location for their 6 MTPA steel plant.

First Published: Mon, March 05 2012. 00:01 IST