New Delhi: South Korean steel giant Posco has sought refund from a rail line undertaking to be set up in partnership with Odisha government citing change in company law but said it wasn’t pulling out from the USD 12 billion steel project in the state.
“…for railway (SPV we) cannot continue keeping deposit any further due to changed company law,” Posco India Spokesperson IG Lee said.
Posco had joined hands with the state government along with SAIL, Rail Vikas Nigam and other players in 2006 to form a Rs 590 crore special purpose vehicle (SPV) for development of a 78-km long Paradip-Haridaspur rail line in Odisha.
Denying reports that the company is pulling out from the multi-billion project in the state, he said: “We are still on Odisha project. Money refund is not for the steel plant land.
Rail Infra refund is as per the changed company law last year.”
Lee also said six employees have “voluntarily” resigned and denied it was any sign of Posco pulling out from the project.
The steel maker’s proposed USD 12 billion project at Jagatsinghpur district in Odisha for producing 12 million tonne per annum (MTPA) is viewed as the largest FDI in India.
It has, however, been stalled for about a decade on account of regulatory hurdles, including delays in land acquisition.
Posco had entered into a pact with Odisha government on June 22, 2005 for the plant, which included iron ore mine development.
However apart from the delays, in a fresh blow to the company, last month the Centre said the company would be required to participate in auction to get iron ore mines to feed its facility instead of direct allotment as assured earlier.
Steel Minister Narendra Singh Tomar had said that the company, which was assured Khandadhar iron-ore mine via dispensation route will have to participate in the auction process to get a mining lease.
Posco was previously promised the Khandadhar iron ore mine by the state for its mega steel plant, considered as the biggest FDI in India, but the actual allocation never happened due to delays in regulatory approvals.
Although the company has a memorandum of understanding with the Odisha government that assured allocation of mining leases, the passage of a Bill in Parliament that made allocation of all mines through auction route only, the agreement with the state will have no value.
In 2013, Posco had scrapped the 6 MT steel project in Karnataka over land and mineral hurdles. The Odisha project was also scaled down to initial 8 MT after it failed to acquire the desired quantity of land.
Last month POSCO had inaugurated a USD 709 million steel mill in Maharashtra to scale up its presence in the country.