Odisha Government is violating its own industrial Policy: Focus on Revenue rather than industrial development


It seems that Government has lost its vision for industrial growth in Odisha. To fulfill its short term populist goals, the government is trying for mopping revenue from mining at the cost its Value addition Industries. In a desperate bid to extract at least Rs.5, 000 crores from Mining, the State Cabinet has recently decided to place the non coal Mines on auction barring those waiting for the first renewals. But the government failed to remember its direct or tacit commitment to provide raw material for mineral based industries, who have invested heavily based on the MoU with the Government. It is also disregarding its own industrial policy of value addition of mineral resources in the state.

On the one hand the State Govt has not succeeded to safeguard the interests of the Industrial houses which have signed the MOU with the Govt to set up value addition Industries and on the other hand the Govt is not doing enough to provide uninterrupted raw material support for the  those End Use Plants  which has seen the light of the day after fighting a lone battle for land acquisition, physical access to acquired land, rehabilitation pressures, Raw water supply etc. Instead of facilitating raw material to these industries the State Government has decided to fill its coffer through auction of mines.

The President’s Ordinance in the following days to liberalize the mineral exploration has dampened the spirit of the State Govt soaring high to mop up revenue from public auction disregarding the exact interest of the End Use Plants. It is learnt that the State Govt. is planning to move the Supreme Court as this President Ordinance has removed all the mines on all deemed extension  from the orbit of auction  till 2030 in respect of captive mines and till 2020 s in respect of  non captive mines. This is likely to hit hard on its ambitious plan to mop up huge direct revenue from Public auction of all the non coal mines barring those awaiting first renewal. This can be understood as the State Govt is desperately looking for revenue to support its populist measures like one rupee kilo rice, rural pensions, salary for state govt employees etc. It is to be noted here that Odisha Govt’s revenue earning from non tax revenue for the period from April to October 2014   has down reduced by more than 16% on account of reduction in revenue from mining sector by 24 %. Out of the 600 mining lease in operation, as on date 242 mines are temporarily discontinued and 142 mines have regulatory and other clearance issues.

But where was the wisdom of the State Govt when they silently watched the Central Govt’s decision to realign the coal blocks in the State from Steel to Power sector? None of the coal blocks in Odisha, which are proposed for auction by the Union Government, is reserved for Steel Industries / EUPs in the state. As per the notification by Ministry of Coal, out of the 101 coal blocks identified by ministry for auction, total 18 coal blocks are in Odisha. Amongst them, 17 coal blocks are reserved for allotment to Power sector companies and one block has been earmarked for non-regulated sectors of steel, cement and captive power. There is no coal block reserved exclusively for steel sector in the state, which has been successful in attracting about Rs. 2 lakh core investment in steel project.74551933

Out of 93 MOUs signed by Govt of Odisha for End Use Plants, 48 have been signed for Steel and 28 for Power. Major investors in steel sector in Odisha like Jindal Steel & Power Ltd (JSPL), Bhushan Steel, Jindal Stainless and Visa steel, which have invested heavily on the basis of the coal block allocated earlier to them now lose the opportunity of  bidding  for their respective coal blocks. The Utkal B-1 coal block, allocated to JSPL prior to the Supreme Court Judgment, has been assigned for the power sector under the government’s upcoming auctions. Therefore JSPL, which is building a 6 MTPA Mega Steel Project in full proximity to the coal block areas, won’t be able to bid for Utkal B-1 coal block. It should be noted that JSPL had obtained all clearances, except the mining lease, to start the coal block. Depending upon this coal block, the Company has set up World’s first Coal Gasification Plant (CGP) for steel making. The CGP – DRI route is being used first time in the steel industry. JSPL has created more than 50000 direct and indirect employments. Similarly, the Radhikapur (W) coal block, earlier allocated to Tata Sponge, SCAW Industries and SPS Sponge Iron is listed under ‘power’ in a list issued by the coal ministry. Similar is the fate of Bijahan Coal Block, allocated earlier to Bhushan Ltd and Radhikapur (E) block, earlier given to Rungta Mines, OCL India and Ocean Ispat. Only Jamkhani coal block, earlier allocated to Bhushan Ltd, is reserved for non-regulated sectors that include steel and cement industries. Dulanga, Manoharpur, DipsideManoharpur, Mahandi, Machhakata, Utkal-E, Utkal –D, Chendipada and Chendipada – II coal blocks are reserved for government owned companies.

After iron ore, Coal is an important raw material for steel production. Without assured supply of coal the Odisha Steel Companies will face challenge to feed their captive power plants and steel plants. Country may import cheap Steel from China for it’s infra need but the locals cannot import their livelihood from abroad. In the interest of the People of Odisha, the State Govt should have moved to the Supreme Court when the Central Govt changed the allocation Plan of Coal Mines for the End Use Plants. Supreme Court’s verdict on cancellation of Coal blocks did not give any directive to change the End Use Policy. Desperation of Odisha Govt is palpable when the President’s Ordinance for liberalizing the non coal mines exploration hit the state Govt plan of mopping up revenues for the State. Similar concerns should have been there to file review petition before the Supreme Court when it canceled all the coal mines including those where End Use Plants have been built and ready for operation spending billions of rupees. The State Govt should have moved to the Supreme Court when the Central Govt unilaterally allocated to the Coal Mines to the Power Sector depriving the Steel Sector for which it was earlier earmarked and End Use Plants were built upon the basis of such allotment signing MOU with the State Govt.niyamgiri_vedanta --621x414

At present, Odisha does not have the capacity to consume the Coal which will be explored from the Coal mines earmarked for the Power Sector. This again will amount to transportation and washing of Odisha Coal within length and breadth of Odisha, which does not have adequate rail network, multiplying to the pollution, traffic and river dumping issues within the State without contributing for any End Use Plants and related employment and sustainable prosperity.,

Odisha Govt needs to open their priority. Whether the mineral resources of the State are for mopping up revenue only or it is primarily for value addition industries which will ensure sustainable prosperity and local employment as amplified in the Industrial Policy 2010 of the Naveen Patnaik Govt.