Jharkhand crisis puts question mark on Rs 60,000 cr investments

It is ironic that only a month after the Jharkhand state Cabinet cleared a rehabilitation and resettlement policy for the state, a move that would unlock over Rs 60,000 crore of investment after three years of uncertainty, the government in question is in danger.

The biggest hurdle to investment in at least three big steel plants in the state was the absence of a resettlement and rehabilitation policy in the state, which led to agitations and civil society protests.

The biggest private sector investment to come Jharkhand’s way was undoubtedly the Rs 40,000 crore Mittal steel plant with a proposed capacity of over 12 million tonnes. For this, the company not only asked for mining leases in iron ore mines but also at least 600 million tonnes of iron ore.

The project got stuck at two levels. The company reportedly had its eye on the iron ore mines in Chiria. Here the claim of the state government was disputed by Steel Authority of India Ltd. An arbitrator was appointed by the government in March 2008 to look into the matter. The second level was of course the land acquisition. In fact, immediately after the resettlement and rehabilitation policy was finalised, Mittal put in a request for the acquisition of 11,000 acres of land in Khunti and Gumla.

Jindal Steel too has announced the setting up of a steel plant at Chandil in the state. Naveen Jindal had, in fact, declared that the plant would be commissioned by 2010 and had also put in a demand for around 250 acres land. The total investment in the project is expected to be around Rs 11,000 crore.

Jindal Power too inked an agreement with the state government in June 2008 for a power plant with a capacity of 2,640 Mw and a total investment of Rs 11,500 crore.

The third big investor is Tata Steel, which, apart from signing MoUs for enhancement of capacity at the existing Tata Steel plants in the state from 5 million tonnes to 10 million tonnes, has also decided to set up greenfield plants at Manoharpur and Saraikella with a capacity of over 12 million tonnes of steel.

Apart from these three companies, Indiabulls Power Services Ltd has also committed to setting up a power plant in the state with a capacity of 1,320 Mw and an investment of Rs 6,600 crore.

Admittedly, the Madhu Koda government inherited these MoUs from the Munda government but even after cancelling mining leases of 10 companies the Koda government took more than three years to reach a stage where these companies could even identify land for the project.

With political developments being the way they are, it appears the wait has just got longer.