Odisha Land Saga: Power Plant Site Reborn for Steel

A familiar structural pattern in India’s industrial landscape is unfolding in Odisha’s Dhenkanal district, where land initially acquired for a thermal power plant that never materialized is now slated for a significant steel manufacturing facility. This development, involving JSW Steel and South Korean giant POSCO, reignites long-standing disputes over land rights, compensation, and environmental impact, echoing the broader complexities of industrial project lifecycles in the region.

The genesis of the current situation traces back to 2008 and 2010, when farmers in Dhenkanal surrendered 887-acre of fertile land to Lanco Infratech for a proposed thermal power plant. Promises of employment and regional development were pivotal in these acquisitions. Despite an expenditure exceeding Rs 7,400 crore on infrastructure, the project stalled, culminating in Lanco Infratech’s financial collapse and liquidation in 2019.

This sequence illustrates a common challenge where initial enthusiasm and significant capital outlay do not guarantee project completion, leaving a vacuum of unfulfilled promises. The subsequent e-auction in 2021 saw the land acquired for approximately Rs 92 crore by Saffron Resources Private Limited, a firm reportedly without prior business operations. JSW Steel later acquired Saffron Resources, and in January 2026, the Odisha government announced a Rs 35,000-crore greenfield steel plant at the site, involving JSW Steel and POSCO.

This repurposing of industrially acquired land through insolvency proceedings often brings the core issue of equitable compensation into sharp focus. Displaced farmers, including Pramod Nayak and Rabi Narayan Rout, assert that the initial compensation was inadequate and job promises remain unfulfilled. Furthermore, local contractors, suppliers, and laborers involved in the original Lanco project are still owed between Rs 250 crore and Rs 300 crore, highlighting a ripple effect of financial distress.

The legal and regulatory dimensions of such land transfers warrant scrutiny. Allegations from a farmers’ forum suggest the land was sold significantly below its market value during insolvency. An application seeking details of the 2021 auction under the Right to Information Act was rejected by the National Company Law Tribunal (NCLT), raising questions about transparency in the asset repurposing mechanism. Currently, the Odisha High Court is hearing petitions from original landowners seeking the resumption of their acquired land, engaging in ongoing discussions with the district administration.

Beyond land rights and financial redress, the proposed steel project introduces significant environmental considerations. Residents express concern over its proximity to the Brahmani river, Odisha’s second-largest, and the potential impact on an area already grappling with pollution. The site lies less than 50 km from the Angul-Talcher industrial belt, officially designated as a “critically polluted area,” with local reports indicating deteriorating conditions and high PM2.5 levels. This underscores the structural dilemma of industrial expansion in ecologically sensitive zones.

The Dhenkanal situation serves as a critical case study on the enduring complexities of large-scale industrial development in India. It highlights a recurring pattern where the initial promise of growth often collides with the realities of project execution, market dynamics, and the protracted struggles of local communities and the environment. The resolution of this dispute will offer insights into how future industrialization efforts balance economic imperatives with social equity and environmental sustainability.