‘Delay in Posco project not to affect South Korean investments’

SEOUL - The delay in clearance to the $12 billion integrated steel project in Orissa proposed by South Korea’s Posco is unlikely to come up during Prime Minister Manmohan Singh’s engagements here nor is it impacting on potential investments into India from this country, sources here said.

“The South Korean leadership understands that both the government of India and the government of Orissa are keen that the Posco project goes through. It is important for us and the largest such foreign investment proposed in our country,” a key source said Thursday.

“Having said that, let me also add that while there will be anxiety there will be no impact on potential South Korean investment in India. South Korean companies are keen on participating in a host of areas including infrastructure,” the source added.

“No, the issue of Posco being raised during our prime minister’s engagements here is highly unlikely. It is not in the agenda.”

It was widely expected that South Korean President Lee Myung-bak, who is the host of the G20 Summit, could raise the matter during his interactions with the Indian prime minister on the margins of the summit Thursday-Friday. The proposal has been hanging fire for more than five years.

The prime minister had arrived here Wednesday night for the two-day summit.

Formally called the Pohang Iron and Steel Co, the South Korea giant had signed a pact with the Orissa government in 2005 to set up the $12 billion mega steel project near the port town of Paradip, some 100 km from Bhubaneswar, by 2016.

The company needed some 4,000 acres, mostly government land, and 2,900 acres of forest area. But thousands rallied against it saying it will displace betel leaf farmers, even as the state government said it will bring prosperity and jobs in a backward region.

(Arvind Padmanabhan can be contacted at arvind.p@ians.in)