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PC tracked Posco clearance almost daily
ANURADHA MUKHERJEE  26th Jun 2011

ormer Telecom Minister A. Raja is under the scanner for fresh allegations of corruption, this time regarding his role in clearing the controversial Posco project in Orissa's Jagatsinghpur during his earlier tenure as Environment Minister. Curiously, P. Chidambaram, who was then Union Finance Minister, took a lot of interest in seeing to it that the project was cleared in time, without giving much thought to the massive destruction of forests and the displacement of people it required.

There was a flurry of letters between the Ministry of Finance and the Ministry of Environment and Forests (MoEF), with the former seeking an update on the status of forest and other environmental clearances of the Posco integrated steel plant project at Kujang every few days. The Sunday Guardian has at least nine such letters that were exchanged between the two ministries between 8 May 2007 and 18 June 2007.

Raja gave clearance to the "minor" port for the steel project on 15 May 2007, a day before he was supposed to hand over charge of the ministry and take over as the new Telecom Minister. The steel plant was cleared in about a month's time.

One of these letters dated 8 May 2007 (copy with us) from the finance ministry asks for details of environmental and forests clearance for the Posco projects so that the "higher authorities" can be apprised of the matter on the same date. There is a file noting on the letter on 8 May 2007 that a brief on the Posco proposal was needed to be put up on the same day.

The very next day, 9 May 2007, another letter from the Department of Disinvestment under the finance ministry sought to know about the status of the environment clearance for the Posco project by 18 May 2007, because the Finance Minister had to attend a meeting with the "members of the Investment Commission on 24th May, 2007". Thereafter, they observe that the "clearance for the port was granted on 15.05.2007". Clearly, the finance ministry was tracking further clearances very closely.

An independent Posco committee set up by Jairam Ramesh under the chair of former environment secretary Meena Gupta in 2010 criticised the manner in which the finance ministry seemed to be tracking almost day to day developments on the MoEF's decisions on the Posco project with rather unusual alacrity.

The MoEF panel on Posco went on to observe: "There was another letter dated 4.06.2007 once again from the Ministry of Finance seeking the status of the Application for the clearance by 11.06.2007 as a high level review meeting regarding progress of POSCO was slated for 16.6.2007. The EAC hastily cleared the steel plant at its meeting on 20.06.2007".

The panel went on to criticise the finance ministry's role: "The committee is constrained to comment that the proximity of the dates between the letters from the Finance Ministry and the hasty processing of the approvals by the MoEF and the EAC despite the serious shortcoming and illegalities is more than a mere coincidence. It is very clear that not all is well with the functioning of the MoEF."

In a strongly worded conclusion, the members said they were "also constrained to observe that the brazen interference of the Ministry of Finance into functioning of another Ministry is most unfortunate, highly improper and against public interest".

This was the majority view in the panel. However, Meena Gupta herself tabled a separate report. Gupta had effectively worked on the clearances for the Posco steel plant after Raja cleared the Posco port project and left the ministry and the portfolio remained with the Prime Minister. The decision to appoint Gupta as the chair of the panel was criticised since she was instrumental in granting a significant part of the clearances after Raja left the MoEF. An earlier panel set up by Jairam Ramesh under N.C. Saxena had also pointed out the irregularities in granting clearance.

The manner in which the entire project was cleared was murky. "The total capacity of the Posco steel plant is 12 million tonnes per annum (MTPA), but clearances were sought in parts, showing the capacity as 4 MTPA to escape any serious scrutiny. No attention was paid to the final capacity of the steel plant. Raja first cleared the Posco port project that was portrayed as a 'minor port' since under a 1994 notification environmental clearance was required only for large ports. Raja took shelter under the 1994 notification by dubiously calling this major port a minor one," said Leo Saldanha, environmental and governmental policy analyst with ESG Bangalore.

The project was considered in its downplayed capacity without considering factors like the 1100 MW thermal power project, the acquisition of 2,000 acres of land for the township, Village Commons, road and rail linkages and the mining project in Kandadhar that involved the destruction of 2,500 hectares (approximately 6,100 acres) of mostly forestland.

"Raja played it safe and only cleared the port on his last day as environment minister and left the steel plant to be cleared soon after, which was within a month. In his last year in office, Raja gave environment clearances to about 2,000 projects," Saldanha added. He also pointed out the manner in which Raja cleared the port on the last day of his tenure as Environment Minister, something that most ministers avoided because of fear of corruption charges.

Meanwhile, the letters from the finance ministry continued till the final clearance to the steel plant was granted on 20 June 2007. That there was immense pressure from the Prime Minister's Office too can be gauged by a letter dated 7 June 2007, titled Top Priority Review of Projects by the PM that wanted to know what action the MoEF had taken regarding the discussion on the "status of infrastructure projects in the state of Orissa" held at the PMO on 19 April 2007 in which the Posco project was a major issue. The meeting at the PMO was attended by Chidambaram and Orissa Chief Minister Naveen Patnaik, among others.

A 13 June 2007 letter from MoEF director G.V. Subrahmanyam to S.K. Nag, deputy secretary, Ministry of Finance, Department of Disinvestment notes, "In view of certain deficiencies for which explanation of the project proponent was sought, as also absence of the video recording of the public consultation, the proposal will again be considered in the EAC (Expert Appraisal Committee) Industries meeting scheduled for 20th June, 2007." The project was cleared a week later.

 
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