POSCO might be on the verge of exiting the Odisha project, but it leaves behind a model that others will do well to avoid, writes Prince Mathews Thomas
The eight containers are a strange sight here in Nuagaon, a village in Jagatsingpur district, three hours drive from Odisha’s capital Bhubaneshwar. Similar to those used by shipping companies for transportation and storage, the containers are surrounded by stretches of sand and some grass where cows are grazing. A couple of hundred meters away there are a few thatched houses and plots of betel vines. While the paint is largely intact on most of the containers, rust is eating in from the sides. There are no doors and glass panes of the windows are missing. Inside, the containers are empty and in most, the floors have given away. In one of the containers, wiring for what would have been a ceiling fan hangs from the roof. In another, broken beer bottles and empty cigarette packets are littered signs of a late night drinking session.
The eight containers belong to POSCO. And till February this year, these containers were the most visible signs on the gound of the South Korean steelmaker whose struggle to set up a plant in India is now 10-years-old. These were used as office ‘cabins’ by POSCO officials who were overseeing land acquisition. On the 16th of the month, locals from Nuagaon and other nearby villages set the containers on fire. “That was the last that we saw of them,” says Ramesh Mantri, who lives nearby, of POSCO and its officials.
Ten days later, news emerged that the company had laid off about 30 employees from its unit Posco Engineering and Construction India Pvt. Ltd. The Gurgaon-based construction firm looks after POSCO’s projects and it was clear that the unit didn’t have much work to keep its people engaged. On July 16, POSCO announced that it was suspending its operations in Odisha due to delays in regulatory approvals. Remaining doubts of the $12 billion-project evaporated when POSCO announced a joint venture in August with the Mumbai-based Uttam Galva group to set up a plant in Maharashtra. The JV had been in the works for more than two years but was put on the backburner by POSCO. Till now, it had the Odisha project higher on the priority list. But now the final die seems to have been cast.
The scene is different far away in the power corridors of Bhubaneshwar and New Delhi, where last attempts are being made to salvage the project. The investment, which would have been the largest by a foreign investor in the country, is important for both the Governments. While Prime Minister Narendra Modi wants to set an example under his Make in India campaign that seeks overseas investors, Odisha Chief Minister Naveen Patnaik realises that the failure of the project might become a political tool for his bête noirs in the state.
A meeting of officials from Prime Minister’s Office, Odisha government and POSCO was held in late August in Delhi. The PMO reiterated that the South Korean company will have to participate in auction to get iron ore mines, as has been mandated by the new mining law called the MMRDA Act. But it is a clause that has made POSCO’s India experience bitter. The company contends that the government had promised to allocate it a mine in Odisha, probably the most important reason for the steelmaker’s keenness to set up a plant in India.
But there is a twist. Governments in the Centre and the State have made a final offer to the company. Can POSCO partner Odisha Mining Corporation (OMC) in developing the iron ore mine? The OMC is a state-owned company and according to the MMRDA Act, mines can be allocated to public sector units. The steelmaker can form a joint venture and source iron ore from OMC. But will it agree? Now the ball is in POSCO’s court.
Back in Nuagaon though, people are eager to move on.
As the afternoon sun beats down at Nuagaon, the mid-day ritual is being played out. Children are walking back from their schools; men, after the morning work in the betel vines are now washing their hands and legs, and women are seated in front of some of the houses, combing their hair. Everything seems to be normal. In Dhinkia, which is a 20-minute drive away, there are no barricades now to welcome visitors. Earlier, entry points to this cradle of anti-POSCO protests were heavily guarded; sometimes women would join their men with bamboo sticks in their hands. Not anymore.
“There are no protests now,” says Prashant Paikray, spokesperson of POSCO Pratirodh Sangram Samiti (PPSS), the organisation that has been at the forefront of anti-POSCO agitation. “We burned their cabins and also brought down the boundary wall that was built on the acquired land. POSCO is finished there,” adds Paikray, who lives in Bhubaneshwar and is travelling to Delhi the next day to participate in a seminar on land acquisition. But there is still some “unfinished work.” Says the activist: “We want the land to be returned and the more than 350 cases, which were filed against us, to be dropped.”
About 2,700 acres of land was acquired by Odisha Industrial Development Corporation (popularly called IDCO) on behalf of POSCO. Almost 1,700 acres had been handed over to the steel company. Though most of it has been demarcated as forest, the 2006 Forest Rights Act empowers people, if they have been using the land for more than three generations, to use it.
After POSCO suspended its operations, the villagers have started reclaiming the land. At Nuagaon, Paikray’s PPSS colleagues guide visitors to the outskirts of the village to show the area where IDCO acquired land on behalf of POSCO. The signs of ‘re-occupation’ are evident. New plots of betel vines have come up on the demarcated land. At one of the plots, a younger farmer is working on the vines. He refuses to talk and doesn’t want to be photographed. “There is nothing to be scared, we are here,” Prafulla Das, a PPSS activist tries to convince the youngster. It is in vain. Perhaps, he realises that the 10-year-old agitation is not over yet and doesn’t want to risk anything.
Though the move to reclaim land has not become a mass movement as the PPSS would have wanted to, IDCO officials have already taken note of the “transgression.” An IDCO official, on conditions of anonymity, said that the organisation will soon write to local administration to remove the betel vines. “We also plan to build a boundary wall,” the official added. He admitted that even if POSCO pulls out of the project, there are no plans to return the land to the natives. “There are other companies who are interested in the land,” he said. One of them is the JSW Group, owned by Sajjan Jindal. The entrepreneur had backed out of a steel project in West Bengal and is now interested in acquiring the land in Jagatsingpur if POSCO walks away from the project.
Debaranjan Swain, a member of the PPSS from Dhinkia, is not pleased when he hears this. He stares out in the open for a few seconds and then says, “Whoever plans to set up a project here, we will drive him away. This is our land,” says the 36-year-old. But he doesn’t sound convincing. Swain grows betel vine over his one acre land and earns about ₹3-4 lakh every three months. “The price of betel leaf has come down from ₹1.2 to 50 paisa per leaf,” says the farmer of the present market conditions of the crop that is mostly exported. He must have been relieved when in 2013, POSCO decided to exclude Dhinkia from the beleaguered project. Locals here boast of a better living standard than other rural parts of Odisha. The betel vines attract migrant labourers, who are attracted by the daily wages of ₹350-400 a day, almost twice the government-decided rate.
Life in transit
But 52 families in Dhinkia have suffered due to POSCO’s change in mind and excluding the village from the project. The families, labelled ‘pro-POSCO,’ were driven away from their homes by those protesting the project. These families were ready to hand over their land in return for compensation, a ‘transit’ home and promise of jobs. They had been living in a transit camp for seven years. But early this year, one by one, all of them have gone back to their villages from the transit camp in Badagabapur.
It was not a happy existence for them. Though each member of the families was given compensation of ₹20 per day, it was not enough to meet their needs. Villagers allege that after the first year, the families didn’t get any medical help from the company. “They sold their cattle, left their houses and fields. Everyone has lost because of POSCO’s project,” says Tamil Pradhan, who earlier led the pro-POSCO group United Action Committee. But with changing ground conditions, Pradhan has shifted sides. “Yes, I used to support the company. But it was on the condition that people are properly rehabilitated. If POSCO can’t do that, it should go back,” says Pradhan. The activist now is busy helping his wife who is a member of the local Panchayat.
While many from the 52 families are now struggling to get back their land that has been encroached by others in the village, the transit camp in Badagabapur looks haunted. Rows of abandoned houses have no signs of life expect for a truck that is parked in the front. “The government has committed a mistake by not taking care of the people who left their villages,” says Pradhan.
BusinessLine made repeated attempts to reach POSCO’s India spokesperson IG Lee. While calls on his mobile phone went unanswered, there was no reply to messages.
Unemployment and political fallout
Back in Bhubaneshwar, Chief Minister Naveen Patnaik would be wary about the ground conditions in Jagatsinghpur. In last year’s elections to the Legislative Assembly, his party colleague and five-time member of the Legislative Assembly, Bishnu Das lost to Congress’s Chiranjib Biswal. Though the elections were a one-sided contest across the state, this huge upset would have bugged the fourth-time Chief Minister. The delay in the POSCO project and the complications arising out of the land acquisition were top issues in the elections.
Now with the increasing possibility of the POSCO project becoming a pipe dream, Patnaik will be vary of the consequences. The opposition will be quick to highlight the low conversion rate of industrial projects and the increasing incidence of unemployment in the state. Last year, the number of registered unemployed youth in Odisha crossed the one million mark. The steel sector, which is considered one of the biggest employers, has provided jobs to just 19,300 Odiya youth in the last 14 years. The POSCO plant would have provided nearly 50,000 jobs directly and indirectly.
Patnaik is hoping that the new Industrial Policy Resolution (IPR) will bring the fillip that the local economy needs. “There is a realisation in the Government that industries are important to provide employment to skilled labour,” says Sanjeev Chopra, Principal Secretary, Industries. Apart from the new IPR, there is also the Odisha Industries Facilitation (Amendment) Rules, 2015 that was cleared by the State Cabinet in August. Under the Act, a new facilitation cell has been constituted that will have specified formats to assess an investment proposal and clear it within a stipulated period. The administration also unveiled a mobile app and software platform that will help prospective investors get information on policies, subsidies, incentives, and also help track their files through several ministries. “Companies will be given incentives according to the employment generation of their projects,” adds Chopra. The eventual target is to attract investment proposals worth ₹1.73 lakh crore.
There is also a move to develop non-manufacturing sectors in a state that is otherwise known for its rich reserves of minerals. The administration has appointed consultancy firm KPMG to suggest five non-manufacturing sectors that can developed. “They will give recommendations on policy and strategy. The report will be submitted in November,” says Chopra.
But will these initiatives help Naveen Patnaik gain the lost ground due to the POSCO debacle?
Fortune Towers in one of the biggest commercial complexes in Bhubaneswar, which is otherwise dominated by government offices. The seven-storey building houses offices of most of the top companies that operate in the state, including Tata Steel, Vedanta Resources, Essar Steel and BHP Minerals. POSCO’s office is on the fifth floor, from where it has been operating since the early days. But now there is not much buzz around it.
The main reception and the space beyond is now bare. Outside, a security guard is idling away. When asked about a couple of POSCO executives, he says, “There is no one here now. Everyone has left. Only a couple of South Korean officials remain.” Can one meet them? He goes inside with the visiting card and comes back in five minutes. “Sir, none is around,” he says with an apologetic face. Clearly, POSCO doesn’t want to face anyone right now.