Odisha pulls the plug on Posco project, hope brightens for rival JSW Steel

State cancels land allotment, says it lay idle for 3 years as Posco didn't show interest in project

India’s biggest FDI project, a mega steel plant worth $12 billion proposed by South Korean maker Posco in Odisha, has finally been consigned to history. Putting at rest every speculation and flip-flop by the steel giant, the state government has slammed the door on the project it once termed an ‘international commitment’.

The state government, through its land acquisition arm Odisha Industrial Infrastructure Corporation Ltd (Idco), has made it abundantly clear that the Posco chapter is closed. In a letter to Posco India dated April 27, Idco has cancelled allotment of 1,880 acres of forest and non-forest land handed over to the company for the steel plant to be built near Paradip. Idco had acquired 578 acres of non-forest land and 1,301 acres of forest land at Kujang and Erasama in Jagatsinghpur district. The acquired patch of land was later transferred to Posco India to facilitate establishment of a mega steel plant of 12 million tonnes envisaged initially but later truncated to eight million tonnes. For the eight-million-tonne plant, Posco India had asked for 2,700 acres of land.

Odisha’s industries minister Debi Prasad Mishra said, the state government was constrained to take the step as Posco allowed the land to lie for three years without showing any intent to develop the project.

Also, Posco had defaulted on land dues worth Rs 54 crore for which Idco had held back transfer of balance land to the company.

“We had asked Posco India to clear the land dues but the company communicated that it has no plan to set up the steel project. The land was kept idle for three years and there was no visible sign of any construction activity by the company. Idco has written to Posco two days back to scrap the land allotment”, Mishra said.

The state government has approved the taking back of land acquired for the Posco steel project to its land bank. Idco has already initiated work on erecting a compound wall around the land to save it from encroachment and avert law and order issues.

The cancellation of land allotment to Posco has opened up a window of opportunity for Sajjan Jindal-led JSW Steel. The steel company has been eyeing this land in Odisha for its proposed 10 million tonne steel mill where it has committed an investment of Rs 50,000 crore together with the setting up of other associated infrastructure.

Jindal called on the Odisha chief secretary and other senior government officials on Friday evening to discuss his project plans.

“Our company is very keen to invest on a steel plant in Odisha. The Posco site is one of the possibilities. Besides, other potential sites are also being examined’’, Jindal said.

Earlier in a letter to the state government in February this year, Posco had communicated its intention to surrender the land as it had no intention to use it urgently.

Posco India had signed a memorandum of understanding (MoU) with the Odisha government on June 22, 2005 to put up a 12 million tonne steel plant near Paradip. The project never showed any sign of taking off at the ground with protracted agitation by the project affected people and the company’s aborted bid to win a captive iron ore mine.