The Prime Ministrer’s Office (PMO) may now come to the rescue of the proposed joint venture (JV) between South Korean steelmaker Posco and the government-owned Steel Authority of India (SAIL) for setting up of a 3-million-tonne plant in Jharkhand. The two companies have failed to resolve issues over the shareholding pattern in the JV, forcing the steel ministry to seek the prime minister?s intervention, sources told FE.
The major bone of contention in the JV is that none of the firms is willing to have a minority stake of less than 50%. While the Korean company wants 51% stake, SAIL has been insisting on a 50:50 joint venture. The companies have met several times to resolve the issue, but without any breakthrough.
?We will take up the matter with the PMO. May be, he (PM) can talk to his Korean counterpart and the issue could be sorted out,? a steel ministry official said.
Under the JV, the companies plan to set up a R13,000-crore steel plant in Bokaro based on Posco-developed Finex technology. The technology allows the direct use of iron ore fines and non-coking coal, thereby bringing down the overall plant installation and operational costs.
The companies have been negotiating on modalities for over a year now and were expected to sign a deal last month, which was postponed as they failed to decide on the shareholding pattern.
SAIL has agreed to offer complete operational control to Posco. It also agreed to let Posco have more members on the board of the proposed company. However, Posco has not buzzed from its stand of having 51% stake in the JV, saying that the government norms in Korea makes it mandatory for companies to be a majority stakeholder in any JV abroad.
?We (SAIL) are ready to offer them maximum but having minor stake in the JV would not be feasible for us,? a ministry official said on the condition of anonymity. The companies have been optimistic on signing the agreement and even steel minister Beni Prasad Verma has said at various forums that the deal will happen soon.
