Posco backs out of Paradip Rail project

Bhubaneswar (BBS): South Korean steel major Posco has withdrawn from the Haridaspur-Paradip rail link project – a move indicating that the fate of the company’s eight-million-tonne steel plant now hangs in balance.

Chief executive officer of the Haridaspur rail project P.K.Mishra said, “The company has withdrawn from the project and asked for the return of its money.”

The company had provided around Rs 27.5 crore for land acquisition for this project. The rail link was crucial for the Posco project as the company planned to get the raw material using this link from the mineral rich belt of the state.

A special purpose vehicle (SPV) was formed in 2006 to expedite the project, and Posco was a part of the SPV, christened as Haridaspur Paradip Railway Company Limited. Rail Vikash Nigam Ltd (RVNL) holds a major share of 48.43 per cent in the SPV.

While two central PSUs – the Paradip Port Trust and Steel Authority of India Limited (SAIL) – are part of the SPV, the state government’s Industrial Infrastructure Development Corporation Limited (IDCO) of Odisha is one of the shareholders.

After Posco withdrew from the project, Jindal Steel Private Limited, Essel Mining and Industries Limited, Rungta Mines Limited and MSPL remain the other partners in the SPV. All of them have business interests in the state.

The rail line is expected to carry about 19 million tonnes of traffic annum. “Posco was the strategic partner in the project. If in future, it wants to use the rail link, it can use it by paying the freight,” said Mishra.

However, Mishra said the rail project work would not be hampered by Posco’s withdrawal.

“There is no dearth of funds for the project. The work is going on smoothly. The land acquisition process has been satisfactory and construction of bridges is almost over,” he said. According to the schedule, the project would be over by 2017.

Sources said Posco decided to withdraw from the project after it apprehended that the company would get no more mines as the Mines and Minerals Development and Regulation Act had come into force.

Steel and mines minister Prafulla Mallick said: “We have raised the issue with the Centre, including Union mines minister Narendra Singh Tomar. But, if they don’t come up with new regulations, what can we do?”

In another development, the state government’s inter-departmental committee’s meeting would be held on Saturday to take a decision on opening of the 29 mines which have been lying closed.