By Sohrab Darabshaw
One more laborious step was initiated in perhaps what may soon be one of the world's top 10 most-delayed projects - the setting up of a US$12 billion steel plant in India by South Korean giant steelmaker Posco (NYSE:PKX). The second attempt to grab hold of the land for the project in the Indian state of Odisha started off with violence, as expected. That was one of the reasons why Posco had to abandon the project when the first attempt was made in 2011.
A few days ago, when company representatives tried to stake their physical claim on land that was traditionally owned by betel farmers, there was a riot and police had to be called in. "Police out, death to Posco!" was one of the many slogans raised by the agitated villagers. Egging them on were members of the local unit of the Communist Party of India. Nearby, barely a few miles away, the steel company had set up a site office to restart the land acquisition process.
Posco has already acquired 2,000 acres, but they need another 700 before work can start. A report in The Times of India claimed that as per the law, the state government cannot acquire lands for the Posco project, nor can construction work be started at the designated site since the project has no environment clearance in hand. "The Environment Impact Assessment (EIA) notification, 2006, forbids activity of any nature at the site without environmental clearance," a senior official in the industry department said. He cited the action taken by the Ministry of Environment and Forest against Vedanta's Lanjigarh alumina refinery to drive home the point. "There cannot be a different rule for the much-hyped Posco project. It has landed in the same situation, warranting fresh preparations for the project to come up," the official said.
India's largest foreign direct investment project has, so far, shown all the symptoms of what can go wrong with projects in India. Conceived eight years ago, there seems to be no end to Posco's problems. Some of the problems plaguing the steel plant, besides locals unwilling to hand over tribal land, is the forest clearance granted to the project being challenged in court. The state government's decision to grant it mining lease is also before the courts. One of the moot questions being raised is: Why should Posco be given iron ore in return for royalty based on prices fixed long ago?
Today, iron ore has become a sore point in Indian politics, and of course is steel sector, with the court ban against it being mined in some states. Besides, Posco has been given all the facilities that come with a company located in a Special Economic Zone, something that the government has not done for local steelmakers. Now the question that has been asked perhaps a hundred times before is: From here, where?