"Business conditions at home and abroad have changed due to drop in global steel demand, growing deficit of subsidiaries, which have led us to come to a conclusion that we must step up our reform efforts," he said at an investor event in Seoul yesterday.
South Korean steel giant Posco has put on hold its $12 billion steel project in Odisha due to delays in various regulatory approvals.
"We are tentatively suspending the Odisha (India) project due to lack of any progress," Posco Chairman and CEO Kwon Oh Joon said.
"Business conditions at home and abroad have changed due to drop in global steel demand, growing deficit of subsidiaries, which have led us to come to a conclusion that we must step up our reform efforts," he said at an investor event in Seoul yesterday.
The steel major's India spokesperson said however that it is not quitting Odisha, even as its over $12 billion project has been hanging fire for almost a decade.
"That is not the fact. Due to no progress in the project area, much of office space was lying vacant in Odisha. It was decided to renovate the office space to a smaller area," a Posco spokesperson told PTI on being asked whether there are plans to exit 12 million tonne (MT) Odisha project.
Posco has been facing problems regarding its mega project in Odisha on account of delays in raw material security, land acquisition as well as other clearances.
The company is reducing its unused office space and other expenditure that can be stopped as part of a massive global cost restructuring programme, said a person in the know of developments.
Posco has announced the restructuring programme, which involves reducing "30 per cent of the overseas business within the Group".
This will involve "early turnaround of newly run overseas business" as well as "dispose/liquidate/merger non core business within the group".
Parties spar over Posco vacating Bhubaneswar office
Political parties today took potshots at each other following reports that Posco has decided to put its Rs 52,000-crore steel project in Odisha on hold.
Both Congress and BJP held the Naveen Patnaik government responsible for non-implementation of the mega steel project even after 10 years of inking of an MoU.
Ruling BJD, on the other hand, said the Opposition had no moral right to blame the state government over the issue as they delayed environmental clearance to the project when in power.
State Industries Minister Debi Prasad Mishra said no official communication has been received from the South Korean steel major in this regard.
He said "Congress and BJP were opposing the project since its inception. Therefore, the Opposition has no moral right to blame the state government for it."
"The previous UPA government had delayed granting of environmental clearance to Posco project," he said.
Mishra said, "I understand from the news reports that Posco has decided to put its Odisha project on hold and is not withdrawing from the state."
Meanwhile, talking to reporters, State Congress Committee president Prasad Harichandan said, "I hold the state government totally responsible for non-implementation of the Posco project. The BJD government has played with the lives and livelihood of people who lost their land, cash crops... in the name of implementation of the Posco project." He attributed the development to the state government's "inefficiency" and accused the BJD government of misleading people in the name of industrialisation.
Senior Congress leader Niranjan Patnaik said the project could not materialise because the state government selected a wrong site. "Officers selected the project site without considering the local situation," he said.
BJP leader Suresh Pujari questioned the BJD government's sincerity towards the project.
"What was the state government doing in the last 10 years? There is no point in blaming the MMDR Act which came into force only this year," he said.
Posco-India has written to the Odisha Industrial Infrastructure Development Corporation (IDCO) stating that it would vacate the office on the fifth floor of Fortune Towers, sources said.
Posco Pratirodh Sangram Samiti (PPSS), which has been leading an agitation against the project, hailed the news of Posco vacating its Bhubaneswar office.
"The project could not progress as it was against the interest of the common people. We thank all the persons, parties and associations that supported the anti-Posco agitation," PPSS president Abhay Sahu said.
Meanwhile, the State Industries Minister suspected that the Posco authorities may have been peeved at the new MMDR Act, which makes provision for open bidding to avail iron ore reserves instead of getting it on the recommendation of the state government.
Though Posco had signed an MoU in 2005 for setting up a 12 mtpa steel plant over 4,004 acre of land near Paradip, the company later reduced its plant's capacity to 8 mtpa thereby bringing down the land requirement to
2,700 acre after failing to acquire land in the first five years.
The state-run IDCO had acquired 2,700 acre of land for the purpose and handed over 1,700 acre to the steel major.
"The remaining 1,000 acre of land is kept ready," the Industries Minister said.
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