India's steel & power project in Afghanistan face hurdles

The project has been put in 'cold storage', says Steel Ministry official

State-run SAIL-led consortium's ambitious multi-billion dollar steel and power project in Afghanistan is believed to have hit a roadblock due to security as well as operational and economic feasibility concerns.

While a top-ranking source in the Steel Ministry said that the project has been put in "cold storage", SAIL Chairman C S Verma maintained that the project was still "officially on".

"The AFISCO project has been put in cold storage. There are several issues. First, it is about the security of the personnel in that country. Then there is a question of economic feasibility as it is difficult to operate there due to a continuous conflict hurting the basic infrastructure," the source said.

For a project of this proportion, the investors need assurance from Afghan authorities on safety of the project, personnel and the infrastructure and all that is taking a lot of time, he added.

The Afghan Iron and Steel Consortium (AFISCO), which won bids for three iron ore mines at Hajigak in war-torn Afghanistan in November 2011, planned to set up a 6.2 MTPA steel plant along with a 800 MW power plant, besides creating the necessary infrastructure. Later the plans were revised downward to reduce the vulnerability of the project.

The three iron ore mines at Hajigak have an estimated reserve of 1.28 billion tonnes.

The consortium has state-owned firms SAIL, RINL and NMDC holding a combined 56 per cent stake with the remaining held by JSW, JSPL and Monnet Ispat & Energy among others.

When contacted, the SAIL Chairman told PTI: "The project is still official on."

Earlier, India's Ambassador to Afghanistan Amar Sinha had also denied reports that the project was being scrapped.

"Not correct. Meeting only did a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of the opportunities and strengths. No decision of this sort," he had tweeted following such reports.

A senior Steel Ministry official said the Afghanistan government has passed the mining act, but India is waiting for more clarity on the policy front.

"There are also administrative issues, regarding how to deal with the provisional government and clarity on the mining law. Another issue is corruption, which has led to several other foreign funded projects being stalled," he added.