The Orissa govt on Wenesday said South Korean major Posco was unlikely to pull out of the state because of halting of work at its proposed Rs 51,000 crore steel project following allegations of violation of green norms.

“There is no such proposal from the company. They (Posco India) might have a separate proposal in Karnataka. That does not mean the company is pulling out of Orissa,” Steel and Mines Minister, Raghunath Mohanty told the news agency.

He added, “Prime Minister Manmohan Singh, South Korean President Lee Mung-Bak and Orissa Chief Minister Naveen Patnaik have agreed to implement the project. Therefore, there is no question of Posco pulling out of the state.”

A Posco-India spokesman said the steel major had already signed an MoU with Karnataka government for setting up a 6 MTPA steel plant there, but that project had nothing to do with the port-based project near Paradip in Orissa.

Posco had signed a pact with the Orissa government in 2005 for setting up a 12 million tonnes per annum (MTPA) steel plant at Jagatsinghpur.

However, the project has failed to take off due to various regulatory and environmental hurdles.

Uncertainty looms over the project as an Environment Ministry expert panel is yet to take a call on the project.

Posco has reportedly submitted comprehensive environment report (EIA) to the Expert Appraisal Committee (EAC) and promised 18 lakh per acre as compensation, along with alternative land, for the tribals who would be affected due to land acquisition.

The Forest Advisory Committee of the Environment Ministry has favoured cancellation of the forest clearance given to Posco, alleging violations of the Forest Rights Act by Orissa.

However, the company has denied having violated any provisions of the Environment Protection Act, 1986.

The plant is proposed to come up in about 4,000 acres, of which 2,900 acres is forested land which requires special clearance, as a captive port is proposed nearby.

Claiming that the state government had completed its work for the implementation of the 12 mtpa steel project, Mohanty said about 1,000 acre had been already acquired when the Centre dashed a “cease work” notice based on the N C Saxena Committee report.

He said the state government was hopeful that posco would set up the Greenfield steel mill after getting clearance from the Union environment and forest ministry.

As its bid to provide raw material linkage to Posco-India was questioned by the Orissa High Court, the state government had already filed a special leave petition (SLP) in the Supreme Court to enable the company to avail of iron ore from Khandadhar reserve in Sundargarh district, Mohanty said.