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GreenTalk: Posco's India project hits another hurdle

India's Comptroller and Auditor General says Orissa misused laws in acquiring land for industrial projects
Orissa posco misused lawEnlarge
In this picture taken in 2007, villagers living under threat of displacement by the construction of a steel plant by South Korean steelmaker POSCO, sort beetel leaves in Dhinkia village of Jagatsinghpur district, some 100 kilometres east of the capital of the Indian state of Orissa, Bhubaneswar. On Monday, a report from India's Comptroller and Auditor General alleged that the state government misused the law to acquire land for Posco and other industry players. (AFP/Getty Images)

Once hailed as India's largest foreign direct investment, Posco's proposed steel refining project in the eastern Indian state of Orissa ran into another hurdle this week, as India's Comptroller and Auditor General (CAG) accused the state government of misusing the law to acquire land for the Korean steel giant, as well as UK-based Vedanta Resources.

The CAG report follows Friday's news that India's green tribunal is suspending the environmental clearance granted to Posco for its $12 billion steel plant in late 2011. 

The CAG also found that Posco and Vedanta were not using the land for which they were allotted and were instead "hoarding" it, the Indian Express reported Monday.

According to the paper, Orissa acquired nearly 5,000 acres of private land between July 2002 and March 2011 to allow six corporations to set up industrial facilities using the emergency provisions under Section 17(4) of Land Acquisition Act. However, the land was not used for several years.

The government acquired around 2000 acres for Aditya Aluminium (Sambalpur), 830 acres for Vedanta Alumina Limited (Kalahandi), 1000 acres for Dhamara Port Company Ltd (Bhadrak) and 440 acres for Posco India Ltd (Jagatsinghpur), the paper said.

Posco signed the agreement to build the steel plant in 2005 and was slated to begin production by the end of 2011, but "protests, environmental concerns and government inquiries into alleged illegalities at a related mining concession have delayed it," according to FirstPost.

Unfortunately for Prime Minister Manmohan Singh, the green tribunal's rejection and the CAG's new findings closely followed his visit to South Korea -- where he assured his counterpart that the Posco project would finally break the logjam.

http://www.globalpost.com/dispatches/globalpost-blogs/india/posco-india-hurdle-cag