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Posco hits Green hurdle by GS Mudur and Ashutosh Mishra

Steel giant Posco’s proposal for the largest foreign direct investment in India has failed to pass environment muster with a central panel picking flaws in the process to settle forest rights and approve the shortlisted site in Orissa.

Three members of the four-person committee have recommended that the Union forest and environment ministry scrap its approvals while the remaining nominee has suggested that the exercise be carried out afresh.

The panel’s recommendations — the final decision rests with the Jairam Ramesh-headed ministry — add a new dimension to the debate on industrialisation and land rights.

A mining project by Vedanta in the same state has already been stalled on environment grounds — the issue helping Rahul Gandhi and the Congress showcase their thrust on tribal-friendly policies.

The Posco project involves wider issues: Rs 52,000 crore in foreign direct investment that will be seen as a test case for India’s ability to accommodate big-ticket capital from abroad. Unlike the Vedanta project located in a tribal area, the Posco project is scheduled to come up in coastal Orissa where people are perceived to be keen on industrial projects.

Korea’s Posco (Pohang Steel Company) plans to build and run the 12-million tonnes-per-annum steel plant at a site about 12km south of Paradeep port. The four-member panel set up by the environment ministry in July this year was tasked with examining whether forest, environment and coastal laws had been followed while giving the approval for the proposed plant.

“I’ve got two reports from the panel — both reports raise concerns relating to forest rights, environment and the use of water,” said Ramesh, the environment and forests minister, after meeting the panel members today.

The ministry will examine the two reports before taking the final decision.

The proposed plant needs about 1,620 hectares, of which 1,253 hectares are forest land that will affect eight villages. The plan for the steel plant has turned a contentious issue with differences of opinion within these villages.

The report from anthropologist and tribal affairs expert Urmila Pingle, forest expert Devendra Pandey and civil rights lawyer V. Suresh said the ministry’s forest clearance had “overlooked serious violations” of procedures.

The three members have pointed out that the district administration of Jagatsinghpur had not been fair and democratic in implementing the Forest Rights Act in the project-affected villages.

They have also identified “serious lapses and illegalities” in the environmental impact assessment procedures. The rapid environmental impact assessment is based on one-season data without taking into account all the components of the project such as water issues and transport facilities, the members said. They also cited “serious lapses” in the public hearing process that left out many communities.

Meena Gupta, the fourth member who is a former environment secretary, has also pointed out that the procedure to recognise forest rights “should be redone”.

Gupta has recommended a new comprehensive environmental impact assessment to examine both the steel plant and the captive port. “Additional conditions, if required, can be imposed on the project before construction starts,” she wrote.

“There is convergence of opinion among panel members on the concerns,” Ramesh said. “They differ on what to do next,” he said. “Gupta has recommended that the existing approvals should continue and Posco should be asked to carry out a comprehensive and integrated environmental impact assessment that has not been done so far. The other members want all existing approvals to be cancelled.”

All four members have expressed concern about the huge water requirement for the steel plant, which will be drawn from the Jobra barrage over the Mahanadi river which also provides drinking water to Cuttack, Bhubaneswar, and irrigation water to Cuttack, Jagarsinghpur, Khurda and Kendrapada. The assessment process has not addressed the impact of water use on large towns and these districts.

An independent environment ministry expert panel had earlier this year indicted the Orissa government for its poor implementation of Vedanta’s alumina project in Orissa’s Niyamgiri hills in Kalahandi district.

But Gupta said there are significant differences between the Posco and Vedanta projects. While Vedanta has nearly completed the construction of its alumina plant, that for Posco’s steel plant is yet to begin as land has not been handed over to the company yet.

The Vedanta project is located in the less-developed western Orissa, home to two primitive tribal groups that depend on the forest for their livelihood. But Posco’s plant is in a relatively developed coastal zone of Orissa where there are virtually no tribes, and the 700 families to be displaced belong mainly to agriculture and fishing communities.