New Delhi: There has been a setback for India’s single largest FDI investment, the showcase Posco Steel plant to be set up in Odisha. The National Green Tribunal has suspended the environment clearance given to Posco Steel. The clearance was given a year ago by the then environment minister Jairam Ramesh.
The National Green Tribunal noted, “Environment clearance stands quashed, fresh terms of reference must be issued.” The Green Tribunal alleged that departmental bias was shown in clearing project pointing out that Meena Gupta, the officer appointed was from Odisha.
“The Environment Impact Assessment report does not take into account the fact that majority of the members who were appointed by Jairam Ramesh had rejected the environment clearance,” the Tribunal added.
The Tribunal also noted that the environment impact assessment was only for 4 million tonnes per annum, whereas the actual capacity of the project as declared by Posco is 12 million tonnes per annum.
Posco will now have to go back to the Environment Ministry and stand in line for a licence all over again.
This setback came even after Prime Minister Manmohan Singh had backed the project while speaking at Nuclear Security Summit in Seoul on Monday. “The government is keen to move forward with the Posco project and there is some progress in this regard. I believe that India is a stable and profitable long-term investment opportunity,” the Prime Minister had said.
Posco had signed a MoU on June 22, 2005 with the Odisha government for setting up an integrated steel plant with the total capacity of 12 million tonnes per annum. But the project had been mired in controversy because of local protests and faulty environment impact assessment report.
NEW DELHI: A green tribunal suspended Posco’s environmental clearance for a megal steel plant on Friday, extending the South Korean steel maker’s seven-year wait and delivering another warning of the many complexities involved in setting up a large manufacturing operation.
A bench of the National Green Tribunal comprising Justice CV Ramulu and expert member Devendra Kumar suspended the final environmental clearance granted to the company by former union environment minister Jairam Ramesh in January 2011.
“The environment clearance granted on 31 January 2011 to the project shall remain suspended till a fresh review, appraisal by the expert appraisal committees, and final decision by the environment ministry is completed,” the Tribunal ruled.
The move is a blow to India’s attempts to placate restive foreign and domestic investors demanding removal of roadblocks to investment and speedy clearances for large projects such as steel and mining. Posco’s agreement with the Odisha government was signed in 2005.
The Tribunal’s decision comes just days after prime minister Manmohan Singh assured South Korean investors that they don’t have to worry about clearances and delays for their projects in the country.
“The government is keen to move forward with the POSCO project,” Singh told the business leaders on Monday, according to news agency Reuters. “I believe that India is a stable and profitable long-term investment opportunity. I urge Korean industry to have faith in India,” he said.
“The judgment is directed towards the MoEF. We will wait and see what course of action the MoEF takes in this regard and follow that. If a review has to be done again, it will be an unfortunate delay,” a Posco spokesperson said. The company had hoped that land acquisition would be possible after the state’s ruling BJD party swept the local panchayat elections recently. But that has not materialised.
Environment ministry officials refused to comment on the grounds that they were still studying the Tribunal’s order. “I have to go into it (order) in detail and study the judgement and decide what further steps have to be takena¦some issues have been pointed out by Tribunal . Certainly, we will take a look at it,” environment minister Jayanthi Natarajan said. Sources in the ministry said that a challenge in the Supreme Court, in the form of a special leave petition, would be considered.
Posco announced in 2005 that it will set up a 12 million tonne steel plant, a power plant and a captive port in Odisha. Protests from farmers and locals in the Jagatsinghpur district in Orissa had delayed the project and land acquisition even today is not complete. The environmental clearance was given only in 2011 well after Posco began considering locations such as Karnataka.
Business confidence in the country has dipped alarmingly and the government is being severely criticised for its feeble response to tackling last year’s slowdown. In the past few weeks, investors have blasted the government for equipping the tax department with what they call as arbitrary powers and changing legislation retrospectively to to generate additional tax revenue. Foreign fund flows have slowed to a trickle and the sensex is now down 5.5% from its peak.
“The government should have long-term and transparent policies if India has to seek foreign investments for double digit GDP growth,” said Assocham secretary general D.S. Rawat. “Otherwise the confidence among foreign investors will be undermined.”
In its order, The Tribunal in its scrutiny of the “entire scheme of the process of issuing the final order” found that a “project of this magnitude, particularly in partnership with a foreign country has been dealt with casually, without there being any comprehensive scientific data regarding the possible environmental impacts.”
It has asked the ministry to consider optimizing the total land requirement for the 4 million tonnes per annum steel plant proportionately instead of allotting the entire land required for the proposed 12 million tonne per annum plant, “which is an uncertain contingency”. It has asked the ministry to consider taking a policy decision that in projects with large capacities and upscaling within few years, the initial environment impact assessment should be for the full capacity and the clearance should be on this basis.
“This validates what we have been saying for so long, which is that serious violations have taken place in the consideration of this project. It is time that the PMO reconsider its monitoring of one single individual project, which despite such high level supervision, has shown complete disregard to the the laws,” said Prafulla Samantray, activist and petitioner. While the order will delay Posco, it is not the end of the road for the South Korean steel maker. What the Tribunal has suspended is the order issued by the environment ministry in January 2011.
The petitioners had challenged the environmental clearance given to the project in 2007, however, the Bench ruled that the final order of January 2011, which is based on the August 2010 review, “resulted only in adding certain additional conditions as precautionary measures.” The review was not bringing into question the 2007 environmental clearance but looking to put in place certain guarantees for environmental protection. The January 2011 final clearance order issued by former environment minister Jairam Ramesh set 28 “extra conditions” for the steel plant and 32 conditions for the dedicated port, which is to be built in the area.
While the Tribunal limited the scope of the appeal to the January 2011 order, it did raise questions about the review committee report which forms the basis of the order.
The order draws of recommendations of the expert appraisal committees, which considered the two reports submitted by August 2010 review committee comprising former environment secretary Meena Gupta, former Director General of Forests Devendra Pandey, activist V Suresh and academic Urmila Pingle. Gupta had submitted a dissenting report.
The Tribunal has raised concern about composition and findings of review committee, particularly the inclusion of Meena Gupta, who was environment secretary when the original environmental clearances were given. “It is seen that she was the Secretary, MOEF, at the time of the issuance of clearances earlier, which are sought to be reviewed… here there is a clear bias to defend her previous acts… Whether the act of Ms Meena Gupta is fair or not, they are definitely hit by personal/official/departmental bias, in other words, she supported the decision made by her earlier. This is in gross violation of the principles of natural justice. Therefore the entire process of of review is vitiated under the law.”