Indo-Korean talks give Posco a skip

Contrary to expectations, India and South Korea gave the Posco issue a skip, with the project missing in the joint statement issued in Seoul on Monday during Prime Minister Narendra Modi's visit.

The mega-steel project, proposed by Posco, did not figure in the diplomatic discourse between Modi and South Korean President Park Geun-hye, fuelling speculation on its possible exit.

This is the first instance in the recent past when a project of Posco's stature (it is India's biggest  foreign direct investment, or FDI) went missing from bilateral talks.

Last year, the South Korean President had blamed the uncertainty in securing iron ore mines as the key reason for the delay in the proposed project. The enactment of the Mines and Minerals (Development & Regulation) Act, 2015, by the government has only nailed Posco's hopes of winning a mining lease, clouding the fate of the project.

For a project that has often topped talks at such levels in the last five years, Posco's exclusion in the India-South Korea bilateral forum could further muddle the fate of the beleaguered project.

Picture this. In March 2012, the then Prime Minister Manmohan Singh and South Korean President Lee Myung-bak reaffirmed the importance of implementing the Posco project in Odisha through a joint statement.

In November 2014, Prime Minister Modi pledged full support for establishment of the mega-steel plant proposed by Posco to the South Korean president on the sidelines of East Asia summit in Naypyitaw, Myanmar.

The importance of Posco project in the Indo-Korean bilateral ties could be gauged from the fact that in 2010, when then South Korean president Lee Myung-bak visited India as the chief guest in the Republic Day parade, Odisha chief minister was specially summoned to the dinner party in Rashtrapati Bhavan to secure an assurance on the smooth progress of the project in the state.

Modi on Monday announced formation of a channel under the name Korea Plus to facilitate South Korean investment in the country. He also agreed with the South Korean President for better cooperation in the steel sector by encouraging the industries of both the countries to develop mutually-beneficial projects. But Posco was not named in any of these statements.

It may be noted that Posco India had entered into an agreement with the Odisha government in June 2005 for putting up a 12 million tonne per annum (mtpa) steel mill near Paradeep at a cost of $12 billion. The project required 4,004 acres in all. The company later redesigned the project, planning to set up 8 mtpa plant in the first phase which needed 2,700 acres.

The state government has so far handed over 1,700 acres to the proponent, holding back further allotment since Posco had not paid off land dues amounting to Rs 54 crore and NPV (net present value) arrears worth Rs 19 crore.

TURN OF EVENTS

• Jan 2010: Odisha CM summoned to meet ex-South Korean president Lee Myung-bak at Rashtrapati Bhavan for assurance on the smooth progress of the project
   
• March 2012: ex-PM Manmohan Singh and South Korean president Lee Myung-bak reaffirm the importance of implementing the Posco project
   
• Nov 2014: PM Modi pledges full support for establishment of the mega-steel plant proposed by Posco on sidelines of East Asia summit in Naypyidaw, Myanmar