Delay in land acquisition and ancillary work has led to considerable cost escalation of Posco’s 12 million tonne per annum mega steel plant near Paradip in Jagatsinghpur district, the South Korean steel major claimed on Thursday.
Delay would lead to about 20 percet cost escalation of the project, which was pegged at around Rs 51,000 crore, chairman-cum-managing director of the big ticket steel venture Yong-Won Yoon said.
The project has been delayed by a multiplicity of factors beyond our control. We have waited with patience for over six years after the MOU was signed with the Odisha government. We are ready to wait further because the company is still prioritising the Odisha project, Yoon said on the sideline of a seminar at its HRD Centre in Jagatsinghpur on Thursday.
Once the state government handed over 2700 acre of the required 4,004 acre, the company would resume construction.
The first phase of 12 million tonne steel plant would be operational by 2016, he said.
If the land so far acquired by the state government is handed over within this year, then the company can start land preparation by the end of this year, the main construction in early 2013, and the operation of the first phase 4 million tonne steel plant in 2016, Yoon said.
Asking the state government to lift the legal embargo on movement of company officials to the project site, Yoon said that the company has written to the state government several times for the lifting of the travel ban.
The restriction has virtually rendered Posco officials immobile. We are unable to do the ground work and win the confidence of villagers, he said.
Posco would exclude nearly 300 acre of private land at Dhinkia panchyat and acquire land from affected people interested willing to hand it over, Yoon added.
The purpose of this seminar was to explain the progress status of Posco’s steel projects in India including Odisha and the SAIL JV to the equipment suppliers and the construction companies and provide them with the basic information with regard to their potential business opportunities in various projects of the South Korean steel giant.
The seminar was attended by the commercial attache of the South Korean embassy along with leading global equipment suppliers and construction companies like SMS Siemag, S-VAI, MHI, Shapoorji & Pallonji, Mukand Ltd and others who showed high interest in the project.
Posco family companies like Posco E & C, Posco ICT and POSRI also attended the seminar.
At the same time, the steel company expressed its disappointment that all important people related with the project, like the chief minister and the chief secretary, were not able to attend the seminar, which might be interpreted by detractors as a negative indicator for the project.
Barely a week after publicly venting its discontent against the state government for not lifting restriction on entry of its officials to the project site, Posco India is understood to have taken a u-turn.
The company authorities are planning to meet the state government’s top brass soon in a bid to ease the strained relations between the two sides.
The meeting between Posco and government officials is seen as a damage control exercise by the steel major in the aftermath of a recent seminar by the company which is believed to have irked the state government.
A top Posco India official confirmed the visit of company officials later this month. He, however, refused to divulge the itinerary of the visit.
Top government officials were not immediately available for comments on the matter.
On last Saturday, Chief Minister Naveen Patnaik stressed on implementing the Posco project with caution, hinting at the rift between the government and Posco India authorities.
Though the project has been battling protests over land acquisition from locals, government support for the big ticket project has been more or less un-stinted, be it facilitating land acquisition or pushing the company’s case for mining lease application.
However, the tirade of Posco chairman and managing director Yong-Won Woon against the state government at the company sponsored global engineering seminar held at Paradip on last Thursday for not lifting the restriction on site visit by the company officials seems to have done the damage.
And with top government functionaries skipping the seminar, the guessing game relating to the project’s future has started among the different stakeholders of the project.
It may be noted that Industrial Infrastructure Development Corporation of Orissa (Idco) had cautioned Posco against organizing any seminar at the project site since the ground situation did not favour the holding of such a meet especially in the aftermath of the recently concluded panchayat elections in the state and release of controversial local contractor Bapi Sarkhel on bail. Sarkhel was nabbed in connection with a bloody violence that had erupted between supporters and opponents of the project on December 14, last year, during construction of the coastal corridor. The state government’s land acquisition agency had even warned that organizing any such meet would jeopardize the best interest of the country’s biggest FDI project.