Crisis seals fate of Jharkhand steel projects

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Jamshedpur: With the current political crisis lingering in Jharkhand following the defeat and subsequent resignation of chief minister Sibu Soren, investors, who had signed memorandum of acquistions (MoUs) with the state four to five years ago, remain unsure about the fate their projects in the mineral-rich state.

Despite the slowdown and the subsequent fall in demand for steel and other commodities, most steel majors are still eager to invest in Jharkhand provided the state government shows eagerness, facilitates the process of land acquisition and resolves other issues.

“I am a little disappointed; we are industrialists, we want to put up steel plants, give employment, and develop states. That’s our job, ¿we are here for the last 100 years,” Tata Steel managing director B Muthuraman recently said when asked about the progress of the company’s proposed 12 million tonne greenfield project in Jharkhand. He said the delay in getting land for the project was disappointing. If there were further delay, the project would go somewhere else.

According to the MoU Tata Steel had signed with the state government, the company promised to expand capacity from the existing 4m tonne to 10m tonne. “Of all the MoUs that have been signed, we are the only company to have actually made investment and expanded capacity from 4m tonne to 6.8m tonne, and are on the way to attain the promised 10m tonne,” Muthuraman said. But the government was yet to act according to the conditions of the MoU, he said.

Some of the mega greenfield projects, including that of Tata Steel (12 mtpa), Essar Steel (10 mtpa), Jindal Steel & Power Ltd (at two locations of 5 mtpa each), ArcelorMittal (12 mtpa), and Jindal South-West (10 mtpa) figure among the 74 MoUs Jharkhand had signed in 2004 and 2005. If the projects were implemented, the state would have received investment worth around Rs 30,00,000 crore. Thousands of jobs would have been created as well.

Jharkhand has seen three chief ministers in the last four years. It has done little to restore investor confidence. The four-month-old government led by Sibu Soren even undid whatever little his predecessor, Madhu Koda, had done. After a long delay, the rehabilitation & resettlement (R&R) policy was passed by the Cabinet during Koda’s regime.

Many people felt that the R&R Policy, which got the Cabinet nod on July 16, 2008, would at last initiate the land acquisition process by investors for their projects.