Iron ore swap holds up Posco MoU renewal

Written by Dilip Bisoi | Bhubaneswar | Updated: Jun 16 2011, 05:40am hrs
Just what is taking the Orissa government so long to renew the MoU with Posco that expired last June Chief secretary BK Patnaik says he is thoroughly examining the MoU in view of the changed scenario.

One of the key stumbling blocks is the provision of swapping of iron ore in the original MoU. While granting the final forest clearance for the Posco project, Union environment minister Jairam Ramesh had said there should not be any export of iron ore from Posco. The state government is yet to take a decision on this. As per the original MoU, Posco India is allowed to swap up to 30% of its iron ore requirement of 600 million tonne ore for blending purposes.

This provision led to widespread criticism with doubts being raised that the South Korean company would take away iron ore from Orissa without value addition in the state. Sources in the government told FE that the government was looking at a way out by taking the view that the export-import of minerals came under the purview of the Union commerce ministry and not MoEF. The swapping clause was as per the law of the land and the concerned ministry had not said anything on the swapping clause. However, the government would take a fresh view on this issue, sources said.

Another bone of contention is the water linkage. In the original MoU, the state government had committed to provide water linkage from the Mahanadi barrage at Jobra in Cuttack. The state government had allocated 122.63 cusec water from the Mahanadi river. However, a people's agitation is gaining momentum under the banner of Mahanadi Bachao Andolon against this massive drawal of water.

Sensing the mood of the people, the state government is now considering an alternative sites for allotment of water. It is now proposing to build a barrage across the Hansua river with an investment of R200 crore and supply water from there to the project. Another alternative is to provide the linkage somewhere in the downstream of river Mahanadi.