Posco likely to increase Orissa plant investment by 20%

South Korean steel major Posco, which is facing protests of the locals over land acquisition for its 12 million tonne steel project in Orissa, may revise project cost upward by 20 per cent due to inordinate delay in getting the project off the ground.

“The investment amount was decided according to the prices and scenario prevailing in 2005. But now we have to change it. The cost may go up by 20 percent due to time lapse. We will come out with actual figure within two-three months,” Ho Chan Ryu, deputy managing director of Posco-India said during a seminar at Paradip.

Initially, the company had proposed to invest $12 billion to set up a 12-million-tonne per year steel plant near Paradip in Orissa, billed as the biggest foreign direct investment in India so far.

However, due to delays in getting regulatory approvals and land acquisition, the company’s ambitious project has not taken off the ground. Though, the state government has acquired half of the required 4,004 acre land for the project, it is yet to give physical possession of the land to the company.

After much hesitation, Posco had last year agreed to start the plant construction work with the available land, but had requested the state government to build a 10 km long approach road to facilitate the construction.

On Thursday, the company said, it needs additional 700 acre land to start the construction work.

“We just want 700 acre more land and the approach road. This can be done within a month if everything is okay,” Ryu said.

The company urged the government to handover 2,700 acre land by the end of this year, so that it can start the construction work by early 2013 and start operation of the first phase of the project comprising 4 million tonne of steel per annum by 2016.

The Orissa government, on the other hand, recently mentioned in the state assembly that land acquisition process in the area has been suspended due to stay order by the High Court.

The steel maker also chided the state government for not allowing its delegates to enter the proposed plant site area for the company sponsored seminar on ‘Posco Steel Project in India’.

On Thursday morning, the event witnessed high drama as the police detained two officials of the company for trying to enter Nuagaon in the project site, the original venue of the event, to oversee the arrangement for the seminar, organised for the company’s equipment suppliers and construction companies, to showcase business opportunities of the mega steel project. Following hectic parleys with the district administration, the venue of the seminar was later shifted to Paradip, 13 Kms away.

Police justified action saying the visit of the Posco officials to the site had created tension as the locals were opposed to the event citing non-fulfillment of their long standing demands.

“The police have not lifted the restriction on entering the site although we have requested several times since December 2011 to prepare for this seminar and also proceed with the land work such as removal of betel vines and cutting the trees etc,” Yong-Won Yoon, chairman and managing director of Posco-India said in the seminar.

The police has ordered ban on entry of South Korean officials into the project site since December 27, 2011 following law and order situation in the area. The ban has been imposed in accordance with the Foreigners’ Act, 1946, and the Foreigners (report to the police) order, 1971.

The company was also dissatisfied with the chief minister and chief secretary not attending its seminar and in its release said, ‘it can be treated as negative indicator for the project’.

[Source – Business Standard]

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