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Jindal Steel’s chromite exploration bid in trouble

The SC cancels the deal between the IDCOL and Jindal Steel and Power to set-up a joint venture firm to explore chromium deposits in Dhenkanal, reports Bhadra Sinha.

business Updated: Feb 04, 2008 22:59 IST
Bhadra Sinha
Bhadra Sinha
Hindustan Times

The Supreme Court has cancelled the controversial deal between the Orissa government-owned Industrial Development Corporation of Orissa Limted (IDCOL) and Jindal Steel and Power (earlier known as Jindal Strips) to set-up a joint venture company to explore chromium deposits in the state's Dhenkanal district.

A bench headed by Justice Arijit Pasayat ordered the cancellation on an appeal filed by the Orissa government seeking the quashing of observations and conclusions about malafides of government officials and the alleged favoritism towards Jindal Steel and Power Limited.

The Orissa High Court had passed the remarks against the authorities for failing to open financial bids of the four companies that filed tenders for the development of the Tangarpada Chromite Deposit.

Directing the state government to reconsider the bids again, the bench said the technical bids of all the three parties shall remain valid. As the financial bids were submitted about five years ago, the bench allowed the companies to submit revised bids within three weeks.

“The appropriate and authorised committee of IDCOL shall consider the technical bids and the financial bids, keeping in view the parameters of the advertisement, the NIT and the best interest of the state,” said the bench.

Since the matter has been pending for long, the court also directed the state government to evaluate the bids and take a final decision by the end of June 2008.

The court’s decision came after Solicitor General of India Ghulam E. Vahanvati, appearing for Orissa, submitted that the state government would cancel the deal and would consider afresh the tender of Tata Steel (TISCO), Jindal Steel and Power Limited and Visa Industries for the exploration of the mineral from the 505-hectare mine at Tangarpara.

The high court had quashed the decision of the government to establish a joint venture — Industrial Development Corporation of Orissa Limted and Jindal Steel -- in the chromite mining project saying that the deal was not transparent.

Observing that IDCOL authorities never considered the effect of the incentives and exemptions as claimed by Jindal Strips on the state exchequer and the public interest of the state, the high court said that “the state government also acted in a matter of granting its approval to Jindal's bid in an equally lackadaisical manner, if not deliberately, with a view to showing undue favour to Jindal Strips.”

The Orissa government had granted lease of the Tangarpada mines in Dhenkanal to IDCOL and subsequently it issued an advertisement in October 2002 stating that it was looking for a joint venture partner who was financially sound to develop the chromite mines and take up mineral exploration, mining, mineral processing, value addition and marketing of the product.