Orissa HC stays grant of PL to Posco

In yet another setback to the proposed 12 million tonne steel project of Posco , the Orissa High Court has stayed the grant of prospecting license (PL) of Khandadhar iron ore mines to the company till March 25, 2009.

The court directed the Centre not to proceed with the grant of PL till 25th of this month, when the court will hear the matter again. Simultaneously, the court asked the state government for submission of all documents relating to the grant of PL.

The stay came on a petition moved by the public sector Kudremukh Iron Ore Company Limited (KIOCL) in the Orissa High Court against the Orissa government’s recommendations in this regard.

In the petition, KIOCL contended that the Orissa government has recommended for grant of PL favouring Posco without taking final decisions on the applications of Kudremukh and 226 other applicants, who had applied for the same property since 1991. Accepting the petition for hearing, the High Court had directed the state government to produce all the related documents few days back.

It may be noted, KIOCL applied for PL of Kandhadhar mines in 2002 and spent about Rs 1.5 crore for undertaking geological survey.

Since KIOCL moved the Orissa High Court challenging the decision, the issue was referred to the revision court of the Union government. The recommendation was returned to Orissa government and the steel and mines secretary was directed to consider all the applicants before making the recommendation.

Accordingly, the steel and mines secretary heard all the applications and based on merit, Posco was recommended for the grant of PL for Khandadhar mines for an area of 2500 hectares in January this year.

Earlier, in June, 2005, the Orissa government had signed a MoU with the South Korean steel major Posco for setting up of a 12 million tonne integrated steel project in Jagatsinghpur district.

Meanwhile, the government sources said, the legal tangle over grant of PL is unlikely to affect the future of the Rs 51,000 crore project. The contention of the petitioner was that the state government has recommended the name of Posco without taking any final decision on their applications, which meant the issue of rejection letter. But the state government had difficulties in issuing the rejection letters as its recommendation pertaining to grant of PL to Posco is not mandatory.

In case the state government issues the rejection letter to the applicants and the Centre doesn't approve the recommendations of the state government, there cannot be any further hearing for the particular mines, the sources pointed out.

There is also confusion on the 90-day dateline for issue of the rejection letter to the unsuccessful claimants of the property, particularly with respect to the cutoff date from which it should be calculated. Though the state government recommended for grant of PL in favour of Posco in the second week of January 2009, the Centre sat on the recommendation. With the model code of conduct in force, the Centre may not be able to take a decision in this regard till the end of the elections.