No commitment on raw material supply in fresh MoUs

With memorandum of understanding (MoUs) of almost all steel companies pending for renewal and running units battling raw material crunch, the state government today decided that it would not give any commitment on raw material supplies in fresh pacts.

"We are not going to make any commitment on raw material supply to the steel industries in the fresh MoUs to be signed with the promoters. The new MoUs will also make no mention of state recommending mineral concession in favour of a company. Recommendation for mineral concession will be made solely on the basis of merit of the applicant driven by considerations like value addition and employment generation”, a senior government official told Business Standard.

The state chief secretary B K Patnaik on Saturday held discussion with senior officials on extension of lapsed MoUs of steel projects.

Since the law department has already ruled out renewing lapsed MoUs retrospectively with the steel players, the state government will enter into instruments or fresh pact with the promoters.

The state government had signed 50 MoUs for steel projects, out of which 30 have commenced production partially. The MoU with Posco, which proposed to set up a 12 million tonne steel plant in the state, has lapsed since June 21, 2010. While the steel & mines department proposed to have a tripartite agreement involving the state government, Posco and Posco India, a final decision is still stuck at the highest level.

Meanwhile, it has been decided to expedite land acquisition process and water allotment for steel projects. The chief secretary has directed that lapsed MoUs should not be a constraint for acquiring land or allocating water for such projects. Even in the absence of valid MoUs, the state government will extend full assistance to developers if they have achieved the requisite milestones, said the official.

On raw material scarcity hitting the operational steel and sponge iron makers, it has been decided to make available iron ore through Odisha Mining Corporation (OMC) by ramping up production of the state controlled miner.

Since OMC was unable to open a host of iron ore mines due to want of forest clearance, it was decided that the chief secretary would review the status of such mines every month.