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LATEST NEWS UPDATES | JSW Bengal faces fresh roadblocks Ishita by Ayan Dutt

JSW Bengal faces fresh roadblocks Ishita by Ayan Dutt

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published Published on Sep 24, 2011   modified Modified on Sep 24, 2011

Mamata Banerjee’s assurance over land allotment, coal access falls flat.

Two weeks after West Bengal Chief Minister Mamata Banerjee assured JSW Steel vice chairman and managing director Sajjan Jindal that all issues will be ironed out, fresh problems, including capping access to coal mines have struck the state’s largest investment.

A number of riders are creeping into the terms and conditions set forth in the development agreement that JSW Steel had signed with the Left Front-led West Bengal government, impacting Banerjee’s assurance, which is likely to fall flat with the two weeks deadline expiring tomorrow.

West Bengal Industrial Development Corporation (WBIDC), the nodal agency for all investment projects, has asked for certain commitments from JSW Steel Bengal before the lease deed is signed, with land and coal being the primary bones of contention. WBIDC would like JSW Steel to give an undertaking and a definite timeline for the project, which is already delayed by three years, but the lease deed being discussed was just for 189 acres of the total 4,334 acres required for the project. Moreover, the 189 acres—which was given to the company as patta by WBIDC— is not contiguous but scattered all over the project site.

“It would be impossible to give a commitment on timeline if the lease is signed for 189 acres,” officials close to the development said. JSW Bengal Steel joint managing director and chief executive officer Biswadip Gupta did not want to comment.

The new state government has already vested the land directly purchased by JSW Steel with it, since the company was said to have violated rules under the Land Reforms Act, according to the government, for not seeking prior exemption under 14Y. The Land Reforms Act of 1955 places a ceiling of 25 acres on land acquisition while Section 14Y exempts the ceiling in four cases: mill, factory, workshop and tea gardens.

JSW Steel, which entered into a development agreement with the West Bengal government in 2007, does not have a lease deed. The company got permissible possession of the land from the erstwhile government.

Coal is another area where the company may have to compromise. “They will have to explain why they need access to the entire reserves in the coal mines if they want to set up three-million-tonne capacity in the first phase. They can step up their requirement once the project achieves full capacity of 10 million tonnes,” West Bengal commerce and industry minister Partha Chatterjee said.

JSW has been allocated thermal and coking coal mines for the project. The coking coal mines have reserves of around 150 million tonnes while the thermal coal mine was estimated to have reserves of 250 million tonnes. JSW has an agreement with the West Bengal government and the West Bengal Mineral Development & Trading Corporation for the mines.

In the first phase, JSW would set up three million tonnes of steelmaking capacity and 300 Mw of power at Rs 20,000 crore. The total investment is upwards of Rs 35,000 crore. Chatterjee, however, did not think that land would be a major hurdle. Asked about the state government failing to stick to the 15-day timeline, the minister said some queries had been raised by WBIDC.

The Chief Minister had personally assured Sajjan Jindal that the issues from the government side would be sorted out in two weeks’ time, following which the lease deed would be signed and work would commence after the festive season. The meeting between Banerjee and Jindal was aimed at thawing the ice, especially, since she had publicly pulled up the company for delaying the project.

The Business Standard, 25 September, 2011, http://www.business-standard.com/india/news/jsw-bengal-faces-fresh-roadblocks/450367/


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