By Saurabh Chaturvedi
NEW DELHI--South Korean steel maker POSCO (005490.SE) has
appealed to a panel headed by Indian Prime Minister Manmohan Singh
to speed up environment clearance for its long-delayed India steel
project, which has been pending for eight years.
Faced with dwindling economic growth and sliding investments,
India had set up the ministerial panel last December, named as the
Cabinet Committee on Investment, to push through procedural
clearances for a slew of projects bogged in red tape.
POSCO's project to invest more than $8 billion in a 12-million
metric ton per year steel plant in eastern India's Orissa state is
one of the largest foreign investment proposals in the country, but
has been stalled repeatedly by local protests, procedural
clearances and legal disputes.
"Due to delay in approval..., the progress of a project of such
international importance has already suffered a lot," POSCO India
said in a letter to the panel, reviewed by The Wall Street
Journal.
"Our project has already been delayed by more than eight years
and in the bilateral interests of both India and Korea, it should
kindly not be delayed any further," it added.
POSCO has acquired more than 60% of the 2,700 acres of land it
would need to set up a 4-million ton per year steel plant for the
first phase of the project, but has been unable to start
construction in the absence of environment clearance. A federal
panel has already cleared the project, but the Ministry of
Environment and Forests is yet to give the final approval.
A POSCO India executive said the company was trying its best to
secure the environment clearance, but did not say whether the
company may pull out of the project.
Citing delays, POSCO in July had pulled out of another project
to build a 6-million ton per year steel plant in southern state of
Karnataka. Frustrated by delays, a spate of high-profile investors
including world's largest steel maker ArcelorMittal and mining
giant BHP Billiton Ltd. have exited from projects in India this
year, dealing a blow to sagging investment confidence in the
country.
When contacted by The Wall Street Journal, a spokesman of the
ministry as well as a senior official, did not comment.
Analysts say POSCO is unlikely to withdraw at this stage from
the eastern India project, but said their experience may daunt
foreign investors.
"Things can't be stuck for so long," said Anjani Agarwal, a
partner with global consultancy Ernst & Young in Mumbai. "You
have to clear big project to give a positive signal to
investors."
Write to Saurabh Chaturvedi at saurabh.chaturvedi@wsj.com
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