Posco shoots back as Idco warns to scrap land deal

The war of words between Posco India and state owned Odisha Industrial Infrastructure Development Corporation (Idco) has intensified with the South Korean steel maker seeking details of utilisation of the amount deposited towards land acquisition.

Posco India has sought item wise expenditure receipts against Rs 30.34 crore that it paid for land acquisition for its mega steel plant in the state. This is after Idco exerted pressure on the company authorities to pay off land dues worth Rs 54 crore within six months failing which the leased land would be resumed. Idco is understood to have served the ultimatum on Posco last month.

Though Idco had acquired over 2,700 acres of land to facilitate setting up of an eight million tonne steel plant by Posco in the first phase, only 1,700 acres has been transferred to the company. Idco had withheld hand over of the balance 1,000 acres, citing that Posco was yet to clear the land dues and NPV (net present value) arrears worth Rs 19 crore.

But refusing to be bogged down, Posco has turned the heat on Idco. In a letter to state-owned infrastrucrure company, the steel maker claimed it paid Rs 23 crore for uprooting of betel vines at the project site, Rs 74 lakh for police base camp, Rs 1.35 crore towards road construction and Rs 5.23 crore towards land acquisition in nine villages.

In a separate letter, Posco has demanded refund of Rs 11.21 crore against acquisition of 438 acres of private land. The steel firm claimed to have deposited Rs 13.52 crore for this purpose. It may be noted that the process of private land acquisition for the project was abandoned due to stiff opposition of the locals and court cases.

Idco authorities denied despatch of any letter to Posco regarding scrapping of land lease agreement.

“We haven’t sent any letter to Posco with an intent to cancel land lease. It’s true that Posco is yet to pay land dues and Idco has been sending reminders to them from time to time,” said a senior Idco officer. Vishal Dev, Idco’s chairman cum managing director was not available for comments. Also, officials at Posco India could not be reached to give their views on the matter.

Posco India had entered into a memorandum of understanding (MoU) with the state government in June 2005 for setting up a 12 million tonne per annum (mtpa) steel mill near Paradeep at a cost of $12 billion. The project required 4,004 acres in all. The proponent later redesigned the project, planning to set up eight mtpa plant in the first phase which needed 2,700 acres.

But the project, billed as the country’s biggest FDI (foreign direct investment), received a jolt recently after the Union mines ministry held that Posco, like others, has to come through the bidding route to win a mining lease under the new Mines and Minerals (Development & Regulation) MMDR Act, 2015

The state government had recommended the Khandadhar iron ore deposits in favour of Posco. But its failure to comply with the clarification sought by the Centre in time and renew the expired MoU with the company for establishment of the project before the promulgation of MMDR Amendment ordinance have marred the chances of Posco to get the mining lease on preferential basis. Hence, though the state has publicly pushed the company’s case, citing that the Centre should allot it mining lease on preferential basis as the project has international significance, the argument has not cut much ice with the Centre.

http://www.business-standard.com/article/companies/posco-shoots-back-as-idco-warns-to-scrap-land-deal-115042400999_1.html

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