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Tata succeeds, while Posco struggles

Tata succeeds, while Posco struggles
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First Published: Wed, Jul 20 2011. 10 54 PM IST
Updated: Wed, Jul 20 2011. 10 54 PM IST
Kalinganagar/Gobindpur: Tata Steel and Posco conceived their high-profile projects in Orissa at around the same time— 2004-05. Both faced similar opposition from land owners and saw long delays in meeting schedules.
Tata Steel’s plant is under way with a commissioning deadline of October 2013, while Posco is still stuck at the land-acquisition stage. Nobody really knows when construction will start.
In the land-acquisition process—the biggest stumbling block for most new plants—Tata Steel followed a few key strategies besides having some natural advantages. These provide some insight into why the experience of the two companies have been divergent.
The single biggest factor was Tata Steel’s sustained communications campaign carried out over several years with the 13 villages located on the 3,471-acre site, even amid hostile conditions.
The company used a special team, devised a communications strategy targeted at women and used its neighbouring Jharkhand connection to bond with the locals. (Tata Steel set up its first steel plant at Jamshedpur, in Jharkhand, in 1907.)
“We mapped the background of each family, and got to know their aspirations,” said Mohit Das, head, corporate affairs, Orissa, at Tata Steel, who was part of the team that engaged with villagers. “We implemented our relief and rehabilitation (R&R) activities and showcased it to the people, and that proved to them that what they wanted was being done.”
The company’s rehabilitation colonies were built by many of the villagers themselves; some participated as contractors. Over three to four years, starting from 2006, Tata Steel successfully relocated 909 families out of a total 1,195, Das said.
Initially, when the villages were too hostile to enter, Tata Steel’s officials had tried hanging around the tea stalls to engage with menfolk. Things only started changing when the company started talking to the right people.
“We spoke to the women as it is they who take the key decisions,” managing director H.M. Nerurkar told Mint in an emailed reply. Tata Steel’s women representatives were despatched to “to talk to them and understand their issues”.
Apart from that the company sent in workers from the Jamshedpur plant belonging to the Ho and Munda tribes to speak with their kinfolk and reassure them about Tata Steel’s intentions. Some of the results are clearly visible—homes at the Gobarghati rehabilitation colony bear the Tata Parivar logo, as do the hospital, transit camps and welfare centres, reinforcing the company’s message.
Still, there were times when the company’s intentions came under intense scrutiny. One of these took place in 2006, when violent protests took place against the state government clearing land—13 villagers and one policeman died.
Tata Steel reacted by taking over R&R from the government. It also took under its wing the families of the villagers who had died.
“After the firing incident, our real relationship with the people started,” said J.K. Padhi, senior manager, corporate affairs. “We took extra care of the families who lost members in the firing and today, out of the 13 families, nine are with us.”
Apart from drafting and implementing the R&R measures, Tata Steel invested Rs 220 crore on various measures.
At the Posco site in the Nuagaon and Gobindpur villages, the South Korean company is conspicuous by its absence. The land acquisition is being carried out by the Orissa Industrial Infrastructure Development Corp.
Resistance against the project is so strong that it would be difficult for Posco to set up a presence, although the company has made several efforts to win local support.
“We have done a lot of community work,” said a Posco official, not wanting to be named. “In the last four years, we have organized and funded flood relief, skill programmes, cleft-lip surgeries, street lighting, mother-child programmes, conservation of energy and done much more.”
Many of the local welfare programmes, however, got dropped because of the delays in the project, according to people who didn’t want to be named.
A natural advantage for Tata Steel lay in the project site being located in the industrial complex of Kalinganagar, where other plants had already been set up, and a highway had been constructed many years before the zone was established. All of this meant the villagers were not strangers to the effects of industrialization.
Some of the existing plants employed locals and had themselves carried out R&R, setting a benchmark for Tata Steel that could then offer a package—Rs 5 lakh per acre of land and other benefits—that most of the land owners found attractive in 2005.
Posco’s 2010 offer—Rs 17 lakh an acre—hasn’t tempted too many in rural Jagatsinghpur who would rather maintain their traditional occupations— cultivating vegetables, paddy and betel leaves.
Tata Steel’s relatively smaller project—a 6 million tonnes (mt) plant—also gave it an advantage. The 3,471 acres it was allocated had a total population of about 3,866 people.
By contrast, the 4,004 acres allocated for Posco’s 12 mt plant held an estimated 22,000 people threatened with displacement, more than six times that in Kalinganagar.
Apart from the measures that Tata Steel took, the company’s name was also a familiar one in Orissa. The Jamshedpur plant was set up more than a century ago in a province that included parts of Orissa at one time. Several villagers in Kalinganagar have relatives in Jharkhand, some of whom work at the Tata Steel’s Jamshedpur plant.
The Tata group has a big presence in Orissa—a ferro alloy plant at Joda, a refractories plant in Belpahar, a sponge iron plant in Bilaipada, besides mining operations in Sukinda and Joda.
Advertisement hoardings and offices of group companies Tata AIG, Tata Sky, Rallis India and Tata Motors dot the area.
Tata Steel’s 100-year history and its engagement with the local population has made its transition smoother. Many of the displaced people will also get jobs in the company as construction picks up and when the plant is commissioned. Unlike Tata Steel, Posco has the disadvantage of being a debutant in a difficult place.
What’s going wrong for Posco?
• Little communication with people, therefore, little trust
• Too many vested interests creating noise, confusion
• Impersonal land acquisition by government
• Stronghold of the CPI, people fear clashes
• Very large project size, too many people to displace
• Foreign company with no other projects done so far in India
Based on visit to Nuagaon, Gobindpur, Polang
This is the second part of a series that examines the issues arising from the acquisition of land for Posco’s $12 billion project in Orissa.
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First Published: Wed, Jul 20 2011. 10 54 PM IST