Posco's Rs 52,000-crore Odisha project to start only after polls: report

South Korean steel giant Posco may have to wait more before it can start its Rs 52,000-crore steel project in Odisha, which involves the largest-ever foreign direct investment (FDI) in India, as the state government is not expected to transfer the required land to it till after the Lok Sabha polls are over, according to a source.

The steel maker secured environmental clearance in January for its 12 million tonne (MT) plant, ending eight years of wait.

"There is no progress on the project as the state government has not transferred remaining 1,000 acres to Posco," the source said.

"Now, considering the elections, we assume there is not going to be any development shortly."

During a review by the Steel Ministry this month to know the fate of major projects, Posco had expressed inability to start work on the steel-to-port project at Jagatsingpur in the absence of adequate land.

The steel giant had inked a pact with the Odisha government in June 2005 to set up the integrated steel plant-and-port project on 4,000 acres of land in the coastal town of Jagatsinghpur. It needs 2,700 acres to commence work on the first phase, while the state government has already transferred 1,700 acres to it.

"Acquisition of the balance 1,000 acre is ending with the state government. Renewal of Memorandum of Understanding is also pending with the state government," a Posco official told the ministry during the review meeting on March 10.

The steel project had received initial clearance from the Environment Ministry in 2007 and final approval was granted in 2011. The National Green Tribunal (NGT), a quasi-judicial body, suspended the permit in March 2012 citing environmental concerns.

However, in January, it obtained the clearance with a condition that Posco must spend 5 per cent of its total investment on "enterprise social commitments", which will push up cost by $600 million (over Rs 3,600 crore).

Meanwhile, a company official expressed hope of a lease agreement with the state government soon so that the work on initial 4-MT plant could start after the general elections.

As per Posco, if everything goes as planned, the Phase 1 of the project might be commissioned in 2018; Phase II will be completed three years after completion of Phase I, and Phase III will be commissioned within three years after Phase II.

Last year, facing inordinate delays in land acquisition and local opposition, Posco scrapped its proposed Rs 30,000-crore project in Karnataka.