Jaitley may convene meet on Posco after Parliament session

FM agreed to review the mega project after a delegation of BJD MPs met him in New Delhi today

Finance minister Arun Jaitley has agreed to convene a meeting on the future of $12 billion Posco steel project in Odisha, the single biggest foreign direct investment (FDI) proposal in the country, after the end of the ongoing Parliament session.

Jaitley gave this assurance after meeting a delegation of Biju Janata Dal (BJD) MPs in New Delhi today.

“The finance minister has assured us full cooperation of the Centre on the Posco project. He told us a meeting would be convened soon on the Posco project in the presence of the Odisha chief minister and company officials,” said BJD MP Kalikesh Singhdeo.

The state government has gone on the damage control mode after the announcement of Posco CMD to freeze its Odisha plan temporarily due to inordinate delay in land acquisition and uncertainty over getting captive iron ore mining lease. Last month Posco said, it was going to shutdown unprofitable local and overseas businesses as part of its restructuring plan in a recessionary metal market.

In addition, the signing of an agreement by Posco with Shree Uttam Steel and Power yesterday, envisaging installation of a 3 million steel plant in Maharashtra, is seen as a precursor to company’s formal announcement of exiting from Odisha and shifting its manufacturing focus to western India. Wary at losing a steel project of Posco’s scale, the state government had recently written to the Centre to arrange a meeting either at the level of the Prime minister or cabinet secretary. Despite being visibly worried, the state government maintained it was hopeful on grounding of Posco project in the state.

Inordinate delay in land acquisition and the row over iron ore deposits have pushed the Posco project to the back foot since it signed the memorandum of understanding (MoU) with the state government in June 2005. Posco’s hopes of bagging the prized Khandadhar iron ore deposits to feed its proposed 12 million tonne steel project were dashed with the enactment of the Mines and Minerals (Development & Regulation) MMDR Act, 2015.

While the project failed to take off, Posco got into a face-off with the state owned Odisha Industrial Infrastructure Development Corporation (Idco) over pending land cost arrears.

Idco had raised a demand of Rs 95 crore towards land acquisition cost.

Out of this, Posco India has paid Rs 54 crore, leaving an arrear of Rs 41 crore. The steel company is also saddled with NPV (net present value) dues of Rs 32 crore.