Jindal’s Orissa steel plant now under scanner

Jindal’s Orissa steel plant now under scanner

New Delhi: The environment ministry has asked Jindal Steel and Power Ltd (JSPL) to state why it should not revoke environmental clearance for the firm’s proposed steel plant at Angul, Orissa.

This could be a setback to the plans of JSPL—controlled by the family of Congress member of Parliament Naveen Jindal—to augment its steel manufacturing capacity.

The Mumbai-listed company has not complied with conditions attached to the environmental clearance given to the 6 million tonne per annum (mtpa) integrated steel plant and 1,000MW captive power plant, according to the show-cause notice issued by Nalini Bhat, a scientist in the ministry. A copy of the notice was made available on the ministry’s website.

The company denied any violations. “We have environment and forest clearances and have not violated any norms," said Sushil Maroo, director and group chief financial officer, JSPL. “We will study the show-cause notice and respond to the ministry."

This is the second steel plant in Orissa to hit an environmental hurdle after Posco’s 16 mt steel project. India is the fifth largest crude steel producer in the world and the largest producer of sponge iron.

JSPL proposes to construct a 12.5 mtpa integrated steel plant and 2,600MW captive power plant in phases, with a total investment of $10 billion (Rs45,700 crore), according to information on its website. The first phase of 6 mtpa is expected to be commissioned by 2012.

The project was granted environmental approval on 22 February 2007, with a caveat that no construction should take place till it receives clearances for 168.3 ha of forest land.

An Angul divisional forest officer issued a notice to the firm on 6 July 2009 over construction work on non-government forest land.

JSPL was also directed to stop all construction activity till clearances under the Forest Conservation Act of 1980 were obtained.

JSPL posted a revenue of Rs4,414.33 crore for the half year ended 30 September. Its shares fell 2.19% to Rs613.85 on the Bombay Stock Exchange on Friday, while the benchmark Sensex shed 0.94% to end the day at 19,136.61 points.

Jindal Power Ltd (JPL), a subsidiary of JSPL that plans to raise $2.1 billion through an initial public offering, was recently in the news when the environment ministry asked the Chhattisgarh state government to take action against it for starting construction of a 2,400MW plant—comprising four units of 600MW each—at a site that had received environmental clearance for only a 1,000MW project. It later allowed JPL to go ahead with preliminary studies for environmental clearance.

Opposition parties have accused the environment ministry of favouring Congress-ruled states when it comes to environmental clearances, Mint reported on 20 August.

Orissa’s ruling Biju Janata Dal said the ministry was biased in denying approval to projects in the state being set up by Posco and Vedanta Resources Plc, while clearing the Andhra Pradesh Polavaram dam project.

padmaparna.g@ livemint.com