Posco in limbo

Published : May 04, 2012 00:00 IST

The National Green Tribunal's decision to suspend the environmental clearance given to Posco vindicates the project's critics.

in New Delhi

ON March 30, the Principal Bench of the newly formed National Green Tribunal (NGT) delivered a momentous decision suspending the environmental clearance (EC) given to the South Korean transnational corporation, Posco, to set up an integrated steel plant at Paradip in Odisha's Jagatsinghpur district. The former Union Minister for Environment and Forests, Jairam Ramesh (currently Union Minister for Rural Development), had granted the EC on January 31 last year (Final Push, Frontline, June 3, 2011).

The NGT Bench, comprising Dr Devendra Kumar Agrawal (Expert Member) and Justice C.V. Ramulu (Judicial Member), directed the Ministry of Environment and Forests (MoEF) to make a fresh review of the project by engaging specialists for a better appreciation of environmental issues.

The Odisha government and Posco signed a memorandum of understanding (MoU) on June 22, 2005, to set up the steel plant, with a total capacity of 12 million tonnes per annum (MTPA), with four million tonnes in the first phase. The project includes a captive power plant and a captive minor' port. (It was masqueraded as a minor port' in order to evade the stringent review demanded for major ports, according to critics.)

The project requires about 1,621 hectares of land, of which about 1,253 hectares is forest land. In addition to this, over 2,440 ha of the thickly forested land in the Kandadhar hills in the Sundergarh district of Odisha has been identified for a captive iron ore mine for the project. Posco, according to the MoU, can extract 600 million tonnes of high-quality iron ore over a 30-year lease period, 60 per cent of which could be exported without processing. A rider in the MoU that such export will have to be in tandem with an equivalent import of similar quality of iron ore does not make any sense at all.

With an initial capital outlay of Rs.51,000 crore ($12 billion at 2005 prices), this is India's single largest foreign direct investment ever.

The MoU, according to independent observers, effectively protected Posco from all business risks and aimed to facilitate its international growth and expansion plans and its unprecedented profit-making venture.

Despite these obvious flaws in the MoU, the then Minister for Environment, A. Raja, gave clearance to the minor' port for the steel project on May 15, 2007, a day before he was supposed to hand over charge of the Ministry. Raja also granted the Coastal Regulation Zone (CRZ) clearance for the project on the same day. (Raja subsequently became the Telecom Minister and had to resign following the expose of the 2G scam.)

On July 19, 2007, the MoEF granted EC to the plant. Ironically, this original EC survives, even though the NGT has suspended the final EC granted by Jairam Ramesh last year. Jairam Ramesh accorded final sanction after imposing 28 conditions over and above those stipulated in the original EC. He also accorded EC for the captive minor port, with 32 conditions over and above those stipulated in the original EC granted by Raja.

The NGT's reason for leaving the 2007 EC untouched is that it was hopelessly time-barred. The NGT Act, 2010, came into force with effect from October 18, 2010, and therefore, the NGT took the view that only those orders passed on or after the commencement of the Act could be challenged. The 2007 EC is valid only for five years, and it would require an extension, with fresh conditions that the new review committee to be set up by the MoEF may impose.

The final clearance

Jairam Ramesh accorded the final EC after the submission of the review report by a four-member expert committee. This committee comprised Meena Gupta, the chairperson, and three other members. As there was no consensus, the committee submitted two reports to Jairam Ramesh, one by Meena Gupta and the other by the remaining three members, on October 18, 2010. The three members were a former Director General of Forests, Devendra Pandey, the civil rights lawyer V. Suresh, and the tribal affairs expert Urmila Pingle. While Meena Gupta favoured the grant of EC, the other three members opposed it. Jairam Ramesh accepted Meena Gupta's report, and this invited much criticism. The appellants before the NGT, Prafulla Samantray and Biranchi Samantray, both activists opposing the Posco project, argued that Meena Gupta was the Secretary of the MoEF at the time of grant of the original EC, and therefore, Jairam Ramesh ought not to have included her in the committee for reviewing the original EC as she was a party to it.

The NGT found Meena Gupta's report a balanced one, but added that there was a clear bias to defend her previous acts as Secretary, MoEF. Her argument was that since the ECs had already been granted, there was no need to go into all the details except suggesting additional precautionary measures. The NGT added: Whether the act of Ms. Meena Gupta is fair or not, they are definitely hit by personal/official/departmental bias; in other words, she supported the decision made by her earlier. This is in gross violation of principles of natural justice. Therefore, the entire process of review is vitiated under the law.

The NGT then added: However, we have kept in mind the need for industrial development, employment opportunities created by such projects that involve huge foreign investment, but at the same time we are conscious that any development should be within the parameters of environmental and ecological concerns and satisfying the principles of sustainable development and precautionary measures.

The NGT Bench followed this observation with a clear indictment of the MoEF's lack of due diligence in the grant of EC to Posco. It held: A project of this magnitude particularly in partnership with a foreign country has been dealt with casually, without there being any comprehensive scientific data regarding the possible environmental impacts. No meticulous scientific study was made on each and every aspect of the matter, leaving lingering and threatening environmental and ecological doubts unanswered.

The Bench directed the MoEF to define timelines for compliance of the conditions in the ECs and, considering the nature and extent of the project, establish a special committee to monitor progress and compliance on a regular basis.

The Bench's other directions are equally significant. It asked the MoEF to consider the feasibility of insisting on every major industry that requires a large quantity of water creating its own water resource facility rather than using/diverting the water that is meant for drinking/irrigation purposes.

It also wished that the MoEF should establish clear guidelines for project developers to apply for a single EC if it involves components that are essential parts of the main industry. In Posco's case, the main industry is the steel plant, but it involves other major components such as port, captive power plant, residential complex and water supply. The Bench apprehended that separation of the processes of granting ECs for different components would result in uncertainty and waste of resources.

Again, the Bench opined that in large projects such as Posco, where MoUs are signed for large capacities and upscaling is planned within a few years, the environmental impact assessment (EIA) should take into account the project's full capacity, and EC should be granted on that basis.

In the case of Posco, the MoU between the Odisha government and Posco stated that the project was for the production of 12 MTPA, but the EIA report had been prepared only for 4 MTPA in the first phase. This MoU, which was signed in June 2005, was valid only for five years, and it expired in June 2010. The State government and Posco negotiated its renewal with some changes in the original terms and conditions. Some observers, citing the State Law Department's opinion, have suggested that the extension of the MoU should have been achieved before its expiry.

Meanwhile, the Comptroller and Auditor General of India (CAG), in its report (civil) for the year ended March 31, 2011, has indicted the State government, exposing serious irregularities in the entire land acquisition process, including the misuse of the emergency provision of Section 17(4) of the Land Acquisition Act for the purpose. The CAG report has revealed that 4,967 acres (one acre is 0.4 ha) of land valued at Rs.165 crore had been acquired by six corporate houses between July 2002 and 2011 in the State much below the prevailing market rate. Posco India Limited (Jagatsinghpur) is one of these corporate houses. The use of the emergency clause in the Land Acquisition Act deprives the landowners of the opportunity to contest the acquisition and to be heard.

The CAG has also revealed that the land acquired was not put to use for a period ranging from 15 months to six years and three months. The stipulated period within which the acquired land must be put to use is six months from the date of notification of acquisition. The Posco Pratirodh Sangram Samiti has demanded the scrapping or relocation of the project as it would destroy the livelihoods of thousands of farmers. In response to the NGT's verdict, Posco has declared its willingness to comply with it. It perhaps has no choice but to adhere to the fresh conditions imposed, as it has huge stakes in the deal.

After granting the final EC, Jairam Ramesh had gone ahead and accorded the final approval to the State government on May 2 last year for the diversion of 1,253 hectares of forest land in favour of Posco. This decision was equally mired in a controversy as it came after the MoU had expired. Activists had then questioned the urgency with which he had taken the decision in the absence of sufficient legal support. This Forest Clearance was challenged before the Orissa High Court, and the case is pending.

Jairam Ramesh had then claimed that the 60 conditions he had imposed as part of the final EC granted to Posco on January 31, 2011, would ensure that the project would not harm the ecology or local livelihoods. The NGT's verdict shows that his optimism was hollow.

Sign in to Unlock member-only benefits!
  • Bookmark stories to read later.
  • Comment on stories to start conversations.
  • Subscribe to our newsletters.
  • Get notified about discounts and offers to our products.
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide to our community guidelines for posting your comment