Steel giant ArcelorMittal may drop the Rs50,000-crore project in Jharkhand if clearance is delayed inordinately, a company director has said, a view contested by another official who deals with Indian operations
Steel giant ArcelorMittal may drop the Rs50,000-crore project in Jharkhand if clearance to it were delayed inordinately, a company director and Luxembourg minister Jeannot Krecke has said, a view contested by another official who deals with Indian operations.
"If Jharkhand is not feasible, we cannot work on the project. ArcelorMittal may drop it if there are delays in approvals. That will be a pity. The country will lose investment opportunities," Mr Krecke told PTI.
However, ArcelorMittal group management board member Sudhir Maheshwari gave a different version saying, "We have no plans to scrap our Jharkhand project. In terms of how projects will be built, it is expected to come up in phases."
ArcelorMittal chairman and chief executive LN Mittal, who was recently in India, had virtually condemned the Indian system saying that the country was “not prepared” to handle such mega investments.
Mr Krecke also said that the company has already downsized its Rs1 lakh crore projects, in Orissa and Jharkhand each, by half. The two states would now have 6-MTPA steel projects from ArecelorMittal, he added.
"ArcelorMittal has decided to downsize the Orissa and Jharkhand steel plants to 6MTPA each due to delays (in acquiring land, among other reasons)," Mr Krecke said.
Mr Maheshwari also contested this statement, saying there was no decision to downsize the two projects and the company's plans would move ahead in a phased manner.
The company is working to set up two 12-MTPA plants in India, one each in Jharkhand and Orissa since 2005.
Elaborating on the company's decision to downsize the projects, Mr Krecke said, "I know that there are problems because it is in some special tribal area and they know that too. So I think they have narrowed the projects and downsized it to 6MTPA (each)."
The decision to alter investments also follows the Karnataka government clearing ArcelorMittal's Rs30,000-crore project in the state.
Asked if the company has already informed the Indian government of its decision to scale down the projects, Mr Krecke skirted the question saying, "It is a private company and it’s up to the businessman to communicate to the government."
About any plans to take up the matter with the government for expediting projects, Mr Krecke said that the company chief had already met prime minister Manmohan Singh and steel minister Virbhadra Singh and conveyed his concerns in this regard.
"I will also go, giving the message to the government for expediting the projects," said Mr Krecke, who has been appointed shareholders' representative on ArcelorMittal's board from 1 January 2010.
The company requires nearly 11,000 acres of land in Jharkhand and about 8,000 acres in Orissa, where it is facing resentment from the locals. The steel maker has been allotted Karampada iron ore with estimated reserves of 65MT mines in Jharkhand to feed the proposed plant. The steel major still awaits iron ore mining leases in Orissa.
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Though the government had earlier this fiscal decided to compensate state-run oil marketing companies by way of oil bonds, the finance ministry has not issued any bonds during the first three quarters.
Petroleum minister Murli Deora is seeking bonds worth Rs30,000 crore for state-run fuel retailers to make up for the losses they incurred on selling domestic LPG and kerosene this fiscal, reports PTI.
"He (Deora) will meet the finance minister (Pranab Mukherjee) this evening on the issue," petroleum secretary RS Pandey told reporters in New Delhi.
Though the government had earlier this fiscal explicitly decided to compensate Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) for the losses they incur on selling domestic liquefied petroleum gas (LPG) and kerosene through the public distribution system (PDS) by way of oil bonds, the finance ministry has not issued any bonds during the first three quarters (April-December 2009).
The three state-run companies lost Rs11,853 crore in revenues due to not being allowed to raise LPG and kerosene prices in line with the cost during April-September. An additional Rs9,019 crore revenue loss was incurred in the third quarter ending 31st December. Mr Deora had last month met prime minister Manmohan Singh on the issue and it may figure again during a review meeting that the PM will hold tomorrow evening.
"We are hopeful that compensation will be issued... Whether it is in the form of oil bonds or cash, it has to be decided," Mr Pandey said.
For the first nine months, oil bonds worth Rs29,872 crore have been sought, he said, adding that for the full fiscal, about Rs30,000 crore is likely to be the revenue loss on sales of LPG and kerosene.
Mr Deora had, on at least two occasions, written to Mr Mukherjee; and on 21st December, he met the PM to request for issuance of oil bonds. However, the finance ministry did not provide for the funds in the supplementary demands of grant (extra spending) that was approved by Parliament last month. "We have not got any bonds this fiscal," Mr Pandey said.
In the absence of bonds, BPCL and HPCL reported net losses in Q2 while IOC barely made a profit. Mr Pandey said the government had decided to make good all of the revenue lost on sale of LPG and kerosene through issue of oil bonds, while the revenue loss on petrol and diesel sales was to be met by upstream firms like Oil and Natural Gas Corp (ONGC).
The three companies currently lose Rs3.06 per litre on petrol, Rs1.56 per litre on diesel, Rs17.23 per litre on kerosene and Rs299.01 per LPG cylinder, he said. They are projected to lose about Rs44,300 crore in revenues for the current fiscal.
Officials said under-recoveries or revenue loss on petrol and diesel amounting to Rs4,003 crore had been compensated by ONGC, Oil India and GAIL India through price discounts on crude oil and products sold to retailers.
The government had issued oil bonds worth Rs71,292 crore in the previous fiscal (2008-09).
HPCL reported a net loss of Rs136.7 crore in the second quarter, while BPCL posted a net loss of Rs158.8 crore. IOC was slightly better off, registering a net profit of Rs284.4 crore.