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State Scan

Steel the deal

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FLASH POINT: The Posco project continues to run into trouble seven years after it was announced (above right). Posco-India CMD Yong-Won Yoon (below) at the seminar which angered the state government

If Posco's recent outburst against the Naveen Patnaik administration is anything to go by, the relationship between the company and the Odisha government has finally soured.

It is seven years since Posco announced its massive steel manufacturing project at a site near Paradip. With a Rs 52, 000 crore investment, a 12 million tons per annum (MTPA) capacity and state-of-the-art technology, it seemed like a dream project. But all that the proposal has yielded so far is uninterrupted agitation by local villagers, which is being policed round the clock, occasional violence, mountains of paper work and opportunistic posturing by politicians.
Like any other ambitious industrial house, Posco had persevered so far, driven by the hope of being able to some day pitch their tent in a state which has a treasure trove of iron ore. But the cozy relationship between the state government and Posco, which has now become restless and angry at the impasse, is finally beginning to sour.

The first sign of this came on March 1 when Posco India's CMD Yong-Won Yoon ignored the state government's repeated warnings not to enter the site and fuel public anger. A group of equipment suppliers and representatives of construction companies were taken to the company's Nuagaon site office for a "seminar". Sensing trouble, the event venue was then shifted to Paradip. At the seminar, Posco stressed its determination to set up the plant.

What sent shock waves through the establishment was Posco's public outburst against the state government. For the first time, the company accused the government of not showing the desired interest in the implementation of the project. In a media release, the company expressed its disappointment that "all the important people related with the project, such as the chief minister and the chief secretary, were not able to attend the seminar, which can be interpreted as a negative indicator for the project". Yoon also expressed surprise at the government's continued ban on his firm's entry into the project site and the curbs on resuming the construction of the coastal approach road.

The government reacted in fury to the Posco CMD's charges. "Posco's conduct is quite unacceptable. Firstly, it was a lie that the chief minister and chief secretary were invited to the seminar. The government is totally against doing anything at the site now because it is bound to vitiate the atmosphere further. We had repeatedly warned Posco officials against visiting the area, let alone hold a seminar there, " said a senior government official. "If Posco wants to set up industry it must follow government instructions in letter and spirit. Posco functionaries have been warned not to malign the government in future. "

Posco has reason to feel let down. After the preferential treatment it got at the start of the project - a special cell in the PMO to monitor progress of the project, an MoU with the state government allowing swapping of iron ore, and SEZ status - it is now having to deal with the reality of its troubled situation.
Apart from the public agitation against land acquisition, the project is caught in a web of protracted court cases. Recently, when the government, backed by armed police, tried to construct the coastal road, it ran into opposition from agitators. The resulting violence killed one person. The government also burnt its fingers when it felled over one lakh trees from the area in the name of land leveling work. The resulting agitation drew in women and children, bringing life in the area to a virtual halt. The project site has all but turned into a battlefield. Fearing total chaos, the state government has since stopped all work in the area.

"In a state where most people thrive on agriculture, a project like Posco is bound to face resistance. The proposed site is a fertile area that yields paddy, paan, cashew and fish for thousands of villagers. The project will ruin all this and turn the villagers into beggars. This is not going to be a steel plant like in Rourkela which provides employment to thousands of people either. We are not opposed the project per se. But the government can always look for idle land for setting up the project, " said Abhaya Sahoo, president of the Posco Pratirodha Sangram Samiti (PPSS).

Posco, however, is hopeful of beginning its main construction work by early 2013 and starting operation of the first phase 4 MTPA steel plant by 2016 if the government succeeds in handing over at least 2, 700 acres of the total 4, 004 acres required for the plant. Officials said the PMO recently reviewed the progress of the project ahead of the Prime Minister's scheduled visit to Seoul in the first week of April for the India-South Korea business meet.

But there is a lack of political will for the project the state now. "A project cannot be set up by oppressing people and creating a hostile atmosphere. Political will is paramount in such a situation because then people can be convinced of the need for the project. Odisha sadly lacks the required political impetus, " said a senior official associated with the project.

Steel and mines minister Raghunath Mohanty, however, denied the allegation that the government is not serious about Posco. "We are committed to the project. Efforts are on for renewal of the MoU, " he said.

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