Posco-Orissa MoU expires

Company not ruling out relocation from the state.

Six years after its inception, South Korean steel giant Posco's $12-billion mega steel manufacturing unit exists only on paper. The company awaits land to be handed over by the Orissa government even as the memorandum of understanding (MoU) between them has not been renewed after it lapsed last year. The company is not ruling out the possibility of relocating the project.

The MoU, which was valid for five years, was signed on June 21, 2005. The company had expressed its intent to set up a 12 million tonne per annum steel plant in Jagatsinghpur district near the Paradip port. It was the only document the company had as proof of its existence in India.

The state government had earlier indicated the MoU would be renewed by July this year. However, nothing has progressed so far while the area continues to simmer with periodic protests by the locals there. Unable to meet this deadline, the government had shifted the date to July 15 and later to July 31, none of which were met.

“We are not delaying the renewal of the MoU. We have sent the draft of the new MoU for Posco's response. But, the company is yet to respond. Once we get the company's comments, we will renew the pact,” said Orissa’s minister for steel and mines Raghunath Mohanty.

According to sources in the state government, the company is unable to make up its mind on certain changes in the previous MoU and the addition of some clauses in the new draft. There are also suggestions the company is looking at relocating the project to another state and is merely buying time.

However, Posco India has denied it. “We are waiting for the state government to hand over the land to us. As of now, the situation is between the state government and locals. We are still committed to the project there,” Vikas Sharan, vice-president, Posco-India, told Business Standard. He, however, refused to comment on the MoU.

Besides, the project was accorded environment and forest clearances only recently, in May this year, so relocating might entail more delays due to the process of forest and environment clearances and land acquisition at the new location.