West Bengal's single-largest investment still stuck

The Mamata Banerjee-led West Bengal government is ready with its second edition of Bengal Leads, an annual investors’ summit but the state’s single largest proposed investment, JSW Steel’s Rs 35,000-crore steel and power project, is yet to take off.

The latest wrangle that appears to be holding back the project is iron ore. A clampdown on mining activities in Odisha has put JSW’s planned arrangement with private miners in a quandary. Iron ore is a pre-requisite for the project.

“The supplementary agreement will have to mention that the project has iron ore. We will have to sort out this matter,” Industry Minister Partha Chatterjee said. Though the state government is now looking for a quick fix solution, after dilly-dallying for the past 20 months, the environment has now changed.

“To build a steel plant of this magnitude, you need iron ore, without which it’s not possible and in today’s environment with what Odisha is doing, it’s impossible,” JSW Steel Chairman and Managing Director Sajjan Jindal said.

It is not known whether Jindal, who was present at the first edition of Bengal Leads, will make it to Haldia tomorrow, when the meet opens. Chatterjee said Jindal had been invited, but was yet to confirm whether he would attend the three-day event. Jindal, however, was not invited for chief minister Mamata Banerjee’s roadshow in Delhi last month.

So far, JSW has invested Rs 600 crore in coal mines and townships, but construction of the steel and power projects hasn’t started. Till the company signs the agreement with the government, its clock will not start ticking. From the effective date (signing of the agreement), the company has a year’s time to start construction.

In 2007, JSW had signed a development agreement with the then Left Front government for a 10-million-tonne steel plant and a 1,620-Megawatt power plant at a cost of Rs 35,000 crore. However, after the change in regime in Bengal, the Trinamool Congress government insisted on a supplementary agreement. But 20 months since, the agreement is still pending clarifications.

The current government’s contention when it took charge was that JSW Bengal had acquired 300 acres directly from landowners without prior approval from the land reforms department. The Land Reforms Act places a ceiling of 24 acres of land acquisition, while Section 14Y of the Act exempts the ceiling. After some discussions, the state government decided to vest the land and then lease it to the company.

State government sources pointed out that there were issues with forest clearance as well.