India: Prospects dim further for massive POSCO project

Published by MAC on 2010-11-16
Source: Times of India, Gfiles

POSCO exaggerated job potential - Report

Times of India

3 November 2010

Did POSCO exaggerate the employment potential of its INR 50,000 crore plant in Orissa? A group of US based experts has accused the Korean steel giant and Orissa of fudging statistics on potential jobs to hard sell the integrated steel plant.

A paper prepared by Mining Zone Peoples' Solidarity Group, a collection of economic professors and engineers and others based in the US, has unraveled the figures estimated in an NCAER report that POSCO funded to find that the project at best will bring only 17,000 jobs in the first year and not more than 50,000 jobs for the state with 0.99 million unemployed.

POSCO had claimed that its project in Jagatsinghpur would bring unemployment down from 0.99 million to a mere 0.12 million.

The paper states that "The employment potential of the project has been grossly exaggerated by POSCO and Orissa government, based on an inaccurate study by NCAER. A careful breakdown of the much touted '8.7 lakh [870,000] man years of employment for 30 years' claimed by the NCAER study shows only 7,000 direct jobs and a maximum of 17,000 direct and indirect jobs in the next 5 to 10 years."

The paper states that this would mean only a "maximum of 1.7% reduction in current unemployment levels as against the exaggerated claims by POSCO".

Their evaluation of the NCAER study and POSCO's claims shows that even when the plant is running at its full capacity 1-30 years from when it starts construction it will only provide 48,000 jobs which is still just 4.7% of current unemployment. That too if one assumes that the number of unemployed remain static in time and doesn't increase with time and population. 

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Post-Posco, forest act emerges as rallying point for tribal rights

By Nitin Sethi

Times of India

5 November 2010

New Delhi: The Forest Rights Act was seen as the pinnacle of the tiger versus tribal debate but the Posco case has shown how UPA's pro-tribal legislation carries more heft than what most had figured.

On Tuesday, the Forest Advisory Committee recommended withdrawal of the forest clearance to the Rs 50,000 crore integrated steel plant project after it affirmed, as two earlier committees had, that the plant was going to come up in violation of the FRA.

The FRA requires that rights of the tribals and other traditional forest dwellers on forests be settled before the land is given to any private or public project. It is essential to secure concurrence of the affected gram sabhas for such diversion of forests where the villagers had traditional rights. The Orissa government was unable to secure the village council approvals and complete the legal process before beginning to acquire land for the project.

This pits the FRA as a stronger legislation than the proposed R&R Bill in which the UPA is still trying to convince Mamata Banerjee to allow the government to step in and buy out any remaining trenchant landowners if the private party can buy out most others.

But for the UPA government it's always been an uphill battle to implement the Act with the forest bureaucracy vehemently opposed to it from the moment it was even proposed. The tribal affairs ministry is incharge of the implementation of the Act but with the forest department in control of the land, their reticence to implement the law has only caused the government trouble. Even the home secretary put it on record that the forest department was opposing settling of rights though the forest association got together to defend its record. But data on the tribal affairs ministry shows that till date less than 4% of the community rights claimed for across the country have been settled in favour of the people. The community rights include rights over forest produce - a lucrative business worth Rs 50,000 crore as per Planning Commission (though disputed by forest department) - still under the control primarily of the forest department.

The FAC took days to come to a conclusion on the Posco case with the forest officials on board along with one tiger expert reluctant to pursue their own directive and ensure adherence to the Act. It remained unclear till Wednesday if the forest officials in the FAC were fully on board with the decision on Posco. Oddly enough, the forest bureaucracy's reluctance to adhere to FRA would have only strengthened the case for industries getting easier access to forest lands.

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Posco's chances dim as another panel says no

By Nitin Sethi

Times of India

3 November 2010

NEW DELHI: The deck's being stacked against Posco. In the biggest blow yet to the South Korean giant's Rs 54,000-crore project in Orissa, a key committee of the environment ministry has recommended the withdrawal of forest clearance to the multinational's plan to build an integrated steel plant. If accepted by environment minister Jairam Ramesh, the recommendation of the forest advisory committee (FAC) could sound the death-knell for the country's biggest FDI project. What adds significance to the FAC's red signal is the fact that it's a statutory body and Ramesh has rarely overturned its recommendations.

The report comes on the back of two adverse reports, with Ramesh citing violations of envirionmental laws by the Korean promoters of the mega industrial project and the Orissa government.

If the content of the report of the FAC, about to be submitted to the ministry, marks a blow, the timing was hardly propitious either. It came on a day when Congress chief Sonia Gandhi identified environment protection as one of the party's top concerns.

The environment ministry, remarkably proactive under Ramesh, had earlier stayed the clearance for Posco after the N C Saxena panel had pointed to violations of the Forest Rights Act by the Orissa government while carrying out acquisition of land for the project. The environment ministry awaited the report of the Meena Gupta committee set up specifically to review Posco for compliance with all green laws.

Three out of the four members of the Gupta committee pointed to grave violations of FRA and other green laws as well as collusion and fabrication by the state government in an attempt to secure the forest clearance.

The report was referred by the ministry to the FAC to take a view on the forest-related violations of the project. The brief for the FAC was clear. If it agreed with the Saxena and Gupta panel reports that the Orissa government had not settled rights of forest dwellers under the FRA and evidence for the same was not presented to environment ministry, it would have to withdraw the forest clearance as per the ministry's August 2009 directive.

The FAC, which has three non-official members on board and is loaded with forest officials, initially dithered from following the parent ministry's directive. It decided to throw the ball in the tribal affairs ministry's court. But an internal review within the FAC of its stand made it clear, sources said, that there was ample evidence of violations of FRA and the ministry's directive made it an imperative that the forest clearance be withdrawn.

Though the FAC is only an advisory body, Ramesh could now find it hard to go against the recommendations of the statutory FAC and two other special committees--one under NAC member N C Saxena and another under ex-environment secretary Meena Gupta. It would also be difficult for Congress to sidestep violations of an Act that it had just recently used in the Vedanta case to prop-up Rahul Gandhi's image as a pro-tribal leader.

The majority report of the Meena Gupta committee had also pointed to serious violations of other green laws--the CRZ rules and the environmental clearance regulations. These are being assessed by different divisions of the ministry separately and sources in the environment ministry said the nature of violations seemed to be as serious in these cases as well.

Posco may not be seeing the end of the road to the current site location yet but the FAC's recommendation will definitely make it difficult for the government to now allow the project in its current shape.

The Orissa government, if it wants to help Posco, could still undertake the settlement of rights under the FRA before applying for a fresh forest clearance with environment ministry but it has in a written submission to the Centre challenging the FRA itself and, playing the law-and-order card, has said that undertaking FRA processes again could lead to violence in the state.

The Orissa government had not been able to settle the forest rights of the people on the location under the Forest Rights Act. It has not been able to secure the mandatory approval of the gram sabhas (village councils) permitting diversion of the forest land. Instead, the two environment ministry panels had stated that the state government had presented fabricated documents to claim it had done so.

Sources said while difference of opinion had existed between the FAC members at the initial stage, it was accepted that Posco had failed in compliance of its conditions laid out while giving the conditional forest clearance earlier. The conditions included one requiring Orissa to furnish proof that FRA had been followed.

Orissa was unable to provide the documentary proof and instead tried to skirt around the requirements of FRA by stating that it had followed another process to do the same.

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Post-Posco, forest act emerges as rallying point for tribal rights

By Nitin Sethi

Times of India

5 November 2010

New Delhi: The Forest Rights Act was seen as the pinnacle of the tiger versus tribal debate but the Posco case has shown how UPA's * pro-tribal legislation carries more heft than what most had figured.

On Tuesday, the Forest Advisory Committee recommended withdrawal of the forest clearance to the Rs 50,000 crore integrated steel plant project after it affirmed, as two earlier committees had, that the plant was going to come up in violation of the FRA.

The FRA requires that rights of the tribals and other traditional forest dwellers on forests be settled before the land is given to any private or pubic project. It is essential to secure concurrence of the affected gram sabhas for such diversion of forests where the villagers had traditional rights.

The Orissa government was unable to secure the village council approvals and complete the legal process before beginning to acquire land for the project.

This pits the FRA as a stronger legislation than the proposed R&R Bill in which the UPA is still trying to convince Mamata Banerjee to allow the government to step in and buy out any remaining trenchant landowners if the private party can buy out most others.

But for the UPA government it's always been an uphill battle to implement the Act with the forest bureaucracy vehemently opposed to it from the moment it was even proposed.

The tribal affairs ministry is in charge of the implementation of the Act but with the forest department in control of the land, their reticence to implement the law has only caused the government trouble.

Even the home secretary put it on record that the forest department was opposing settling of rights though the forest association got together to defend its record.

But data on the tribal affairs ministry shows that till date less than 4% of the community rights claimed for across the country have been settled in favour of the people.

The community rights include rights over forest produce - a lucrative business worth Rs 50,000 crore as per Planning Commission (though disputed by forest department) - still under the control primarily of the forest department.

The FAC took days to come to a conclusion on the Posco case with the forest officials on board along with one tiger expert reluctant to pursue their own directive and ensure adherence to the Act.

It remained unclear till Wednesday if the forest officials in the FAC were fully on board with the decision on Posco.

Oddly enough, the forest bureaucracy's reluctance to adhere to FRA would have only strengthened the case for industries getting easier access to forest lands.

* Editorial note: The UPA is the Congress Party-Left coalition which is currently India's ruling government.Cry, beloved coastline

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Is this $12-billion project a sleight-of-land venture to short-sell Indian resources and seafront heritage?

by MG Devasahayam

Gfiles magazine *

November 2010

POSCO-India's project to build a steel plant yielding 12 million tonnes per year in Orissa, with a captive port and iron ore mines, is acclaimed as the single largest infusion of Foreign Direct Investment (FDI) since the Indian economy liberalized in 1991.

Estimated at $12 billion (Rs 52,000 crore), the project, said the Orissa government, would "bring prosperity and well-being" to its people through industrialization based upon exploitation of its natural resources.

However, the project has faced strong resistance from a vigorous people's movement on the ground, comprising villagers apprehensive of losing land and livelihood.

Consequently, five years after the project's launch, POSCO has yet to acquire a single acre of land and is embroiled in legal, logistical and procedural quagmires.
Perhaps to rescue the company, Minister of State for Environment and Forests Jairam Ramesh appointed a four member committee comprising Meena Gupta, former Secretary, MoEF, V Suresh, a civil liberties lawyer, and Devender Pande and Urmila Pingle, experts on forests and tribals, respectively, to go into all issues relating to the environmental and forest clearances granted to the project.

Ironically, the committee's majority report (3 to 1) has further pushed the company into the slush by recommending revocation of the environmental, coastal and forest clearances granted.

The committee's majority report (3 to 1) has further pushed the company into the slush by recommending revocation of the environmental, coastal and forest clearances granted.

The finding is as damning as that of the NC Saxena Committee in the case of Vedanta: that these clearances were secured through suppression of relevant information by the project proponent, that regulatory agencies systematically overlooked critical concerns, and that key appraisal bodies of the MoEF and the Orissa government ignored experts' demands for comprehensive inquiry and rushed the clearances through regardless of the project's irreversible and widespread social, environmental and economic consequences.

At the outset, the appointment of Gupta, who was Secretary of the Ministry when the clearances for POSCO were accorded, as the committee chairperson was a case of conflict of interest. There was obviously a hidden agenda which is revealed in her highly opinionated "minority" report starting with her objection to the Terms of Reference of the Committee to "review compliance with statutory provisions, approvals, clearances and permissions under various statutes, rules, notifications, etc."

She also castigated the other members when they wanted to assess not merely the compliance with the clearances granted, but the grant of the clearances per se. Her report recommends adoption of a "business as usual" approach i.e. the POSCO project should go ahead, while some more comprehensive studies could be undertaken though they will have no bearing whatsoever on mitigating the project's massive environmental and social impact. She also did not want anyone to even question the legitimacy of the clearances given when she was at the helm of affairs.

GUPTA'S shenanigans appear to be not merely to cover up her own role but also the continued complicity of the MoEF. This is evident from the fraudulent manner in which POSCO obtained the Environmental and Coastal Regulation Zone (CRZ) clearances.

To start with, this massive project was deliberately unbundled into its smaller parts and applications moved to secure their clearances as though they were independent projects (4 MTPA steel complexes, 400 MW power plants and captive "minor" port), even though they constituted one project and were situated within one complex and POSCO had clear intentions of ramping up production to the full capacity of 12 MTPA in just six years (by 2011).

These clearances were given on the strength of a single- season rapid EIA instead of full-year comprehensive EIA, as required.

Gupta covers up her own and the MoEF's complicity. This is evident from the manner in which POSCO obtained the environmental and related clearances.

The township project, requiring considerable additional land, as well as the huge water requirement for the project were suppressed. Claiming the port to be a "minor" one is a major fraud. The port was designed for Capesize ships - 170,000 DTW capacity, each approximately 280 m in length, perhaps the largest built in Asia, to come into the ecologically sensitive Jatadhar creek.

This would require 12-km channels and tranquil berthing facilities for which there would be massive sea walls built - one 2 km and another 1.6 km long. The devastation that such massive infrastructure facilities would cause is unimaginable, considering that the Jatadhar creek is an important nesting site for the critically endangered Olive Ridley turtles. This is the region of paan kethis (betel vine farms) where sand dunes provide sweet soil and water and also protection during cyclones.

The people deserve an answer from Jairam Ramesh, the scholarly Minister striving to bridge the "cultural divide" between environment and development.

POSCO also did not come clean on the fact that it would raise the entire base of the 4004-acre plant area by five metres by dumping millions of tonnes of sand dredged from the sea to protect the plant from a supercyclone like the one that slammed Orissa in 1999 (with wind speeds of 260 kmph, waves of 5.6 m height and 100 km length). It swept some 20 km into the hinterland and killed 15,000 people.

That the ramifications of such a plant design will devastate the ecologically sensitive estuarine and deltaic complex and potentially increase vulnerability of surrounding regions was clearly not a concern for POSCO or the MoEF authorities.

The "majority report" is clear that there was comprehensive violation of the due processes of the Forests Rights Act by the Orissa government and suppression of critical concerns of environmental and social impacts of the project, raised in the Orissa State Pollution Control Board, Regional Office of MoEF (Bhubaneswar) and in initial meetings of the Environmental Appraisal Committees of the Ministry. Hence the recommendation for their immediate revocation.

THE majority report reveals from file notings that there were pressures - especially from the Union Finance Ministry, then headed by P Chidambaram, a former Director in Vedanta. It says: "The committee is constrained to comment that the proximity of dates between the letters from the Finance Ministry and the hasty processing of the approvals by the MoEF and the EAC despite the serious shortcomings and illegalities is more than a mere coincidence.

It is very clear that not all is well with the functioning of the MoEF. We are also constrained to observe that the brazen interference by the Ministry of Finance into functioning of another Ministry is most unfortunate, highly improper and against public interest."

It has also been revealed that where there should be only one set of minutes of the final decisions of the Expert Appraisal Committee of the MoEF, there are actually two, the unofficial version amended by the chair to benefit POSCO.

What all this reveals is that the POSCO project, like the Vedanta one, is a sleight-of-hand joint venture to short-sell India's natural resources to corporate moneybags. Were one to factor in the issues involved in the mining clearances, not yet secured, particularly the revenue stream losses - given the pathetically low royalties now required to be paid - the project is certain to be an exemplary carpet bagging exercise.

Efforts are on to bring about an image makeover for the project. Certain media groups have joined this charade by calling the independent majority group a "kangaroo court".

Intense efforts are on to bring about an image makeover for the POSCO project. Certain media groups have joined this charade by calling the independent majority group a "kangaroo court" without any expertise while hailing the pliable former bureaucrat as an expert. The Vedanta and POSCO episodes raise a critical question. What is the mandate of the MoEF?

Is it to protect and safeguard the environment and natural resources of the country, which is the common heritage of its 1.2 billion people? Or to function as a midwife chaperoning corporate investors and carpetbaggers in mindlessly exploiting our natural heritage by willfully violating the laws of the land? There is another reason for concern.

Recently, a new entity - a "road on stilts", an euphemism for an 18-ft high and 80-ft wide concrete monstrosity on massive pylons - was smuggled into the CRZ draft notification to make it a permissible activity on India's sandy beaches over the waves. Given the potential this has for devastation of the Indian coastline by opening it up to huge construction and commercial real-estate development, it is easy to guess who are behind this crude manipulation. The people deserve an answer from Jairam Ramesh, the scholarly Minister striving to bridge the "cultural divide" between environment and development.

 

* MAC Editorial note: MG  Devasahayam is a retired senior IAS (Indian Administrative Service) officer, and Managing Trustee of Citizens Alliance for Sustainable Living, based in Chennai.

Gfiles describes itself as India’s "first independent magazine written, designed and produced for the country’s civil services".