Tuesday, November 2, 2010

Posco's chances dim as another panel says no

Posco's chances dim as another panel says no
Nitin Sethi, TNN, Nov 3, 2010, 01.41am IST

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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