An Indian tribunal on Friday suspended
environmental clearance for a long-delayed multi-billion-dollar steel plant in
the east of the country planned by South Korean industrial giant POSCO.
Friday's
ruling by the the National Green Tribunal is expected to further set back the
US$12-billion project in mineral-rich Orissa state – the largest foreign
investment commitment to India which was first announced in 2005.
The
decision by the government-appointed panel is likely to fuel further unease
among foreign companies about India's regulatory environment that has been
heightened by retroactive tax measures proposed this month.
"The
environment clearance granted on January 31, 2011 to the project shall remain
suspended till such a review and appraisal is done by the ministry,"
Justices C.V. Ramulu and Devendra Kumar Agarwal ruled.
The
proposed plant in Jagatsingpur, a coastal district 100 kilometres (60 miles)
east of the state capital Bhubaneswar, has been the focus of protests since
POSCO signed its initial deal with the Orissa government.
The
tribunal noted the agreement between the Orissa government and POSCO refers to
a plant able to produce 12 million tonnes of steel annually.
But the
environmental impact report was prepared looking only at the first phase of the
plan to produce four million tonnes a year, the justices said.
"The
environmental impact assessment should assess it (the project) for the full
capacity right from the beginning," they said.
The
order passed by the National Green Tribunal, set up two years ago to handle
environmental disputes, following a plea filed by an environmental activist.
It
suspends clearance to the project granted a year ago by then federal
environment minister Jairam Ramesh.
Locals
say the plant will interfere with their traditional forest-based livelihoods
and uproot them from their homes.
The
POSCO deal has been watched as a test case by foreign investors eager to enter
India's fast-growing economy but wary of the potential for environmental and
other concerns to derail their plans.
Billions
of dollars worth of projects have been delayed due to problems over
environmental clearances and land acquisition in recent years.
AFP
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