The $12-billion Posco steel project in Orissa, stalled for the last five years, finally got all environment clearances on Monday to start work. Environment minister Jairam Ramesh gave a ?conditional? green nod to the South Korean company?s steel and power plant, but most significantly, accepted the Orissa government?s plea that there was no violation of tribal land.
None of the 28 conditions imposed ? including ploughing back 2% of the net profit into corporate social responsibility projects? will be difficult for the company to meet.
Posco India managing director GW Sung told FE: ?We welcome and accept, with humility and gratitude, the decision of the honourable minister.?
A relieved Orissa steel and mines minister Raghunath Mohanty said the state government has already committed to Ramesh that it will comply with any conditions laid down for clearing the project.
The environment ministry turnaround was helped by last week?s meetings of Ramesh with Sung where the company made a detailed presentation of its position. In his statement, Ramesh seemed to have accepted those contentions. He said the ?final word? on the project was ?Undoubtedly, projects like Posco have considerable economic, technological and strategic significance for the country, but at the same time, laws on environment and forests must be implemented.?
Corporate India welcomed the clearances, with CII President Chandrajit Banerjee saying ?the project has been a matter of concern in the context of foreign investments in India as well as from the point of view of the sustainability of the larger green field projects.? A Reuters report quoting World Steel Association said demand for steel in India is expected to rise 14 % this year, outpacing the world?s 5.3 % growth on the back of surging construction of buildings and infrastructure and huge investments by global car-makers.
The company on its part, said it was ready to start work as soon as entire 4,000 hectares of land (including forest land) required for the project is leased out to it. As of now, the Orissa government has transferred about 600 hectares of land. Mohanty said the Centre’s demand for an assurance from the state that tribals dependent on forests don?t live on the 1,253 hectares of forest land that is earmarked to be diverted for the steel plant, will be complied with immediately. In its order, the ministry has imposed 28 conditions on the steel plant and another 32 conditions for the captive minor port to go ahead. Right from August last year, when the ministry stopped work on the project, there had been massive consultations between South Korea and the Indian government to revive the project. Last week, commerce minister Anand Sharma told Seoul that he hoped the project will be on track soon. The clearance will also come as a boost for foreign investments after a series of setbacks for big-ticket industrial projects.
The other conditions include a study of the water requirements, maintaining of ambient air quality and ensuring that 25% of the total project area is kept as green area at all times. Posco entered India in 2005 after signing an MoU with the Orissa government to set up a 12-million tonne integrated steel plant at Jagatsinghpur near Paradip. But since then, the company has been struggling to get clearances for land acquisition due to various reasons including a protests by tribals. In August 2010, a four-member team headed by former environment secretary Meena Gupta had given a split verdict on the project. Gupta disagreed with the majority who recommended closing the project and said it should be cleared with conditions. Gupta refused to comment on the latest development on Monday. She told FE: ?My job was only to give the report.? The expert committee had cited violation of provisions in Forest Rights Act pertaining to displacement of tribals. The company’s port project, it said, had shown improper adherence of coastal regulation zone clearances. For the captive minor port, the ministry has stipulated that the steel major will have to protect the shoreline and make a detailed assessment of the impact on the fishing communities and the resultant economic losses covered in the relief & rehabilitation package, besides submitting a detailed Marine Environment Conservation Plan. ?The implementation of conservation plan should start before commencing construction of port,? the statement said.
The ministry recently accorded conditional environment clearance to other high-profile projects such as the Lavasa integrated township and Navi Mumbai airport projects. As for the forest clearance for the project complex, the MoEF has asked the Orissa government to give a ?categorical assurance to the ministry that one of the three conditions related to non-tribals, that is residence, dependence and occupation of the forest land before 2005, is not fulfilled in case of claiming or cultivating land in the Posco project area.? Posco is among several companies, including Vedanta Resources, which have come under MoEF scrutiny, putting the ministry in conflict with others in the government who have been pushing for rapid industrialisation. While the fate of the Vedanta project hangs in balance, the clearance for the steel project is being seen as a clear indication about the intent of the government to push through important investment following a conciliatory approach. The company, which configured its project as a multi-product SEZ later, has also failed to secure the approval with the Board of Approval looking into SEZ clearances. The time for giving this clearance has been extended as land acquisition for the project is yet to begin. The company is also facing regulatory hurdles in leasing iron ore mines.