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On very shaky grounds

The clearance given to Posco is based on the findings of a paid-for study, write Shankar Gopalakrishnan and Biju Mathew.

india Updated: May 24, 2011 22:13 IST

When the Union environment ministry cleared the Pohang Iron and Steel Company (Posco) project on May 2, the media saw this as a step forward. Recently, five prominent citizens — Prashant Bhushan, Aruna Roy, Swami Agnivesh, Vandana Shiva and Arvind Kejriwal — wrote to the prime minister seeking an inquiry into the project. They wrote: “There is enough evidence in the public domain for us to suspect criminal collusion between this company and government officials.” Which version of the story is correct? Is the Posco project a step forward or a scam in the making?

The first area of concern is the project itself. Till date, all claims about the project’s contribution to the “development of Orissa” are based on a 2007 National Council of Applied Economic Research (NCAER) study. However, in 2010, a US-based research group found that the study had been paid for by the firm and had ignored the vibrant local economy when calculating benefits. In fact, Posco’s own figures showed that the project would produce at most 17,000 jobs, while destroying the livelihoods of more than 50,000 people. Further, the government’s promise to provide captive iron ore mines to the company would result in the company receiving a 300% return and a profit of at least R1,95,000 crore after all expenses. This profit would result from the handover of natural resources at very low rates — as it has been done in the 2G spectrum scam.

Things got murkier when we examined how the government made decisions about the project. The courts have twice intervened to stop Orissa’s attempts to allocate mines to Posco, finding that it had violated procedures. The environmental clearance process was described by the environment ministry’s own enquiry panel as “farcical”. The panel condemned the “cavalier and reckless attitude of the concerned authorities”, who had ignored “potentially disastrous” impacts. The only dissenting member was Meena Gupta, the former secretary who had issued the clearance in the first place. The committee also found that Posco’s own maps showed the project would violate the Coastal Regulation Zone and that the company had suppressed this fact. Yet the ministry cleared it with a handful of meaningless conditions. For instance, one condition says that Posco will build its port “without disturbing sand dunes”. This would require the port to be suspended in mid air!

Further, three different committees found that the Forest Rights Act (FRA) had been violated in the area. Each time, the ministry buried the findings. Under the Act, among other things, the state has to produce resolutions from the local village assemblies agreeing to the takeover of forest land that belongs to them. To date, the government hasn’t produced a majority resolution from a single village. Yet again, the ministry ignored this. Instead it tried to divert attention by questioning villagers’ majority resolution against the project. What is more, the FRA remains completely unimplemented in the proposed mining region.

In sum, the government relied on a biased, paid for study to justify a project whose main beneficiary is the company, ignored the “potentially disastrous” environmental impacts that could threaten thousands, and it is trying to grab land and forests that belong to people. Its main concern has been to give the company cheap access to land, iron ore and other valuable resources. In the light of recent events, this sounds very familiar. If we don’t want to face another potential 2G scam, a halt to the project and an inquiry are sorely needed.

( Shankar Gopalakrishnan is member, Campaign for Survival and Dignity, an NGO, and Biju Mathew is associate professor of business, Rider University, US )

The views expressed by the authors are personal

First Published: May 24, 2011 22:11 IST