India’s largest $12-b FDI in Orissa hits a roadblock

As with any big project, Posco India’s proposal raises concerns about displacement, ecology, socio-economic implications. At the same time, the political motivations steering the ongoing protests at Jagatsinghpur are not lost on the Orissa government.

Considering the Kalinganagar incident, which left at least 13 dead in police firing on protesters demonstrating against a Tata Steel plant, the state government is treading carefully, and has put in place elaborate rehabilitation & resettlement packages.

But the anti-Posco movement is not convinced, and this leaves Posco— which has obtained clearance at all levels— worried about the project timeline and investor confidence.

Of the 4,000 acres allotted to Posco in Jagatsinghpur, close to Paradip port, 3,600 acres belongs to the government. Only 400 acres needs to be acquired. But encroachments on government land make things difficult.

‘‘Every member of a family in these villages earn anywhere between Rs 1,500 and Rs 2,000 per month,’’ Dr Biswajit Ray of Rashtriya Yuva Sangathan (RYS) points out.

Some 20 families of Dhinkia accepted government compensation, but were ostracised by villagers and not even allowed to buy grocery till the district collector intervened.

The government is also taking the middle path. ‘‘We have recommended that the company starts work on the undisputed part of the land, while we work on the disputed settlements,’’ said the State Minister for Steel and Mines Padmanav Behera.

There are reports of infighting in the anti-Posco groups, but essentially the movement is led by the CPI-inspired Posco Pratirodh Sangram Samiti (PPSS) and the former Congress Chief Minister J B Patnaik’s Vitabati Surakshya Sangram Samiti. The Posco Kheti Grihast Ekta Manch launched jointly by a section of the ruling coalition of Biju Janata Dal (BJD), BJP and Congress, is no longer in the fore.

J B Patnaik’s is a different story. He is unfazed that the Congress at the centre is offering him no support. After all, the central government has cleared the project. At last week’s Pradesh Congress Committee meeting, the Posco issue came up and the All-India General Secretary of AICC in charge of Orissa V Swamy was heard supporting the project. He apparently refused to participate in the anti-Posco rally the state party had organised on the same day. Though the signals from the central party leadership are not encouraging, Patnaik says he will fight on.

The PPSS has a larger agenda based on a grand conspiracy theory. The fight at Jagatsinghpur is not just against Posco. ‘‘We are against the WTO agreement. We see Posco as an agent of US. The US could not enter India with Enron. So now they have sent Posco, using the proximity US has with South Korea,’’ insinuates Akshya Kumar, National Convenor of Yuva Bharat Sangh.

They are propounding that the Posco project is tailored for huge national losses. They want the mines to be developed indigenously (never mind that the government has no resources to do so) and the iron ore should be sold to Posco at the market rate.

Based on the investment Posco is making they estimate their cost for procuring the iron will be Rs 400 per tonne, at a time when the market rate is hovering around Rs 2,600 per tonne. With Posco being given mines with ore reserves of about 600 million tonnes, they have computed the loss at Rs 90,000 crore, and a total national loss of Rs 2,94,135 crore.

At the Bhubaneshwar office of Posco, officials are worried.

‘‘Phase I of the project is to be completed by December 2010, which includes setting up a steel plant capacity of four million tonnes, the infrastructure surrounding the project, completing the land acquisition and the mining development,” the company spokesperson said.

At the end of the day, Orissa, for all its mineral wealth, has been an economic laggard. The sudden boom in the international steel market is a bus it cannot

afford to miss. That’s precisely why the state government knows this and is going all out to attract investments.

POINT-COUNTERPOINT

• Will displace some 30,000 people

• Many are encroachers on government land, but it’s willing to compensate; waiting for survey

• Posco’s ultimate intention is to export iron ore

• Counter: Project doesn’t allow any ore to be shipped out before a similar quantum of iron ore in imported by Posco, resulting in a nil export status. There is also ceiling on the swap volume at 30% of the ore consumed by Posco’s plant at Jagatsinghpur

• Port at Jatadhari can destroy Paradip port, about 7.5 km north

• Counter: The port will come up only after a detailed study of its impact on the coastline

• Water taken from the Taldanda and Birupa canals for the project will hit irrigation in Cuttack, Jagatsinghpur and Kendrapara

• Counter: Water will now be taken directly from the Mahanadi barrage at Jobra in Cuttack using a pipeline. The company’s requirement of 67.55 million gallons of water per day will not affect irrigation supplies in the region.