Talks with Posco on MoU renewal inconclusive

The road to renewal of Memorandum of Understanding (MoU) with Posco India seems to be bumpy with the officials of the steel firm and the Orissa government failing to reach a consensus even though the pact lapsed on June 21 last year.

In the latest of their series of interactions with the state government, the Posco India officials on Wednesday met state Chief Secretary B K Patnaik and steel & mines secretary, Manoj Ahuja and held discussions on the terms and conditions of the MoU. But the talks remained inconclusive.

"We had talks with the officials of Posco India on the renewal of MoU but we are yet to arrive at any settlement. Also, Posco is yet to submit a written response to the draft MoU sent by the state government for renewal,” said Patnaik.

Patnaik had earlier indicated that the process of renewal of MoU with Posco India was in the final stage.

Despite commitments from top officials, the renewal of MoU with Posco India has suffered inordinate delay. The state government had earlier indicated the MoU would be renewed by July this year. However, nothing has progressed so far while the project area continues to simmer with periodic protests by the locals. Unable to meet this deadline, the government had shifted the date to July 15 and later to July 31, none of which were met.

The contentious issue of ore swapping is one of the key issues to have delayed the renewal of MoU.

The previous MoU, signed on June 21, 2005, allowed the company to export 30 per cent of iron ore reserve allotted to it and import same quantity of high grade ore. The company justified this concession saying the iron ore found in Orissa had relatively high alumina content, which required blending with high grade ore for better blast furnace life and productivity.

But with the company later deciding to use Finex process, which can use low grade ore, the need for ore swapping became redundant. Moreover, the then Union minister for environment and forest Jairam Ramesh and subsequently, the state steel and mines department had opposed the inclusion of swapping clause in the renewed MoU.

Apart from exclusion of ore swapping, the new MoU draft proposes sourcing of water for the project from Hansua river close to the project site instead of earlier plan to carry water from Jobra barrage in Cuttack on river Mahanadi.

Similarly, the employment clause in the new MoU draft, to which the company has informally conceded, stipulates reservation of jobs for local people in unskilled, semi-skilled and supervisory category. It may be noted, the state government has decided to include this clause in all new MoUs and those coming up for renewal giving priority to locals in employment in various posts.

Among other things, the renewed MoU will include conditions for promotion of ancillary and downstream industries by the company, sources said.