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Govt to review 236 MoUs for setting up steel plants

Govt to review 236 MoUs for setting up steel plants
PTI
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First Published: Thu, Oct 06 2011. 03 08 PM IST

Steel plant (File photo Bloomberg)
Steel plant (File photo Bloomberg)
Updated: Thu, Oct 06 2011. 03 08 PM IST
New Delhi: Unsatisfied with the progress of proposed steel projects, entailing estimated investment of Rs 11 lakh crore, the government will review hundreds of MoUs signed by companies in past 5-6 years as most of them have remained only on paper.
“Our companies have mastered the art of signing MoUs as most of them are on paper only. As many as 236 such agreements have been signed in last 5-6 years for setting up iron and steel units but most of them have neither acquired land nor have got mining leases to set up their units,” Steel Minister Beni Prasad Verma told PTI.
Steel plant (File photo Bloomberg)
Most of the MoUs have been signed between private corporate houses with several states including Karnataka, Orissa, Chhattisgarh and Jharkhand.
The government had set the target of producing 120 million tonnes of steel by March 2012, of which only 75-78 million tonnes capacity has been created so far. According to experts, the target looks unachievable in view of delays in setting up plants.
Asked whether the government would take some steps in consultation with the states to expedite these projects, the minister said “lets first review all MoUs and the reasons for their delays”.
“India will be ahead of United States (in terms of steel production capacity), if they (all MoUs for steel plants) get implemented. Only Posco has got some land, otherwise there is no progress,” Verma said, adding that the review will be done in next 15-20 days.
Concurring with the view that there are issues of land acquisition, while allocation of mines are prerogative of state governments, the steel minister said that “it is a question of seriousness. If you are willing, you would definitely take some measures to remove it”.
Several big ticket investments like Arcelor Mittal’s two steel plants of 12 million tonnes per annum (MTPA) capacity in Jharkhand and Orissa, worth about Rs 1 lakh crore, are yet to see the light of the day due to land acquisition and mines related issues.
Similarly, the Rs 54,000 crore Posco project in Orissa has been allotted land to set up a 12 MTPA plant in phases, but it is facing acquisition woes as the locals are unwilling to vacate their properties.
Sajjan Jindal-led JSW Steel is another company on the list which had proposed to set up 10 MTPA plant in West Bengal for about Rs 35,000 crore in 2007. The project includes setting up of a 300 MW power plant and development of a coking coal mine in the state.
Even after four year, its issues - mainly on land acquisition and mine development - with the state government are yet to get resolved fully.
Asked whether there will be glut of steel in the country if all projects come up, Verma said “there is huge potential for rise in steel consumption, so there is no such fear.”
Tata Steel’s proposed 6 MTPA steel plants in Orissa’s Kalinganagar and its expansion of Jamshedpur facility has taken off but it is yet to complete.
Moreover, agreements of state-run firms like SAIL and NMDC are also under ministry scanner. While SAIL has entered into agreements in last few years with other leading players like Posco and Kobe steel of Japan, the projects are yet to materialize.
Similarly, many steel projects in Karnataka, which has emerged as a favourite destination for investment by the companies, are yet to see light of the day.
Among the major proposals in the state are of Posco, Arcelor Mittal and Essar Steel, who have proposed to set up three plants of 6 MTPA capacity separately. The projects involve investments of about Rs 90,000 crore.
Besides this, state-run RINL has also proposed to set up a 3 MTPA unit in the state at an estimated investment of Rs 15,000 crore.
A proposal to set up iron ore pellet and steel plant in North Karnataka at an estimated cost of over Rs 87,000 crore, through a joint venture between two Chinese companies and their three Indian partners have also not made much progress.
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First Published: Thu, Oct 06 2011. 03 08 PM IST