AP cancels alienation of over 10K acres land to Brahmani Industries Ltd

HYDERABAD: Andhra Pradesh government today decided to cancel alienation of over 10,000 acres of land to Brahmani Industries Ltd, about 11 months after it terminated the MoU entered into with Gali Janardhan Reddy promoted firm to set up an integrated steel unit in Kadapa district.

BIL is a subsidiary of the Obulapuram Mining company owned by former Karnataka minister Gali Janardhan Reddy, who is now in jail in connection with the illegal mining scam.

"Chief Minister N Kiran Kumar Reddy today approved the proposal to cancel alienation of 10,760.66 acres of land to Brahmani Industries in Kadapa for failure to establish an integrated steel plant," a press release from the chief minister's office said.

On May 31 last year, the state government issued an order terminating a Memorandum of Understanding (MoU) it entered into with Brahmani Industries, to set up an integrated steel plant in Kadapa district, as it "totally failed to fulfil its commitments".

The then AP government headed by Y S Rajasekhara Reddy allotted 10,760 acres of land to BIL to set up the integrated steel plant with an initial production capacity of two million tonnes per annum, which was to be expanded to ten million tonnes by 2017.

The proposed plant would directly employ 10,000 and also creating indirect employment for one lakh people, it was earlier said.

When the project was initially mooted, the government had agreed to allot 8,000 acres to BIL.

Several incentives under the Andhra Pradesh Industrial Promotion Policy 2005-10 were also extended to BIL, as it was classified as a "mega project".

The YSR government also allotted 3,115 acres of land to BIL to set up a "commercial airport and flying academy" at Ambavaram village in Kadapa district.

In its latest audit report, the Comptroller And General ( CAG) rapped the AP government over indiscriminate allotment of land to BIL.

After BIL failed to fulfil its obligations and complete its project works, the AP state government issued several notices seeking explanation.

The AP government also found out that BIL had mortgaged the land allotted for the steel plant and obtained a loan of Rs 350 crore from Axis Bank.

The Kadapa district collector filed a criminal case against the company in this regard and the case is now being investigated.

In its response to the government on March 1, 2011, BIL had claimed that since its parent company stopped operations, its steel plant works were also stopped.

It had even sought to push the blame on the AP government, alleging that the latter "deliberately and arbitrarily" prohibited mining operations of Obulapuram Mining Company and Ananthapur Mining Corporation, the profits of which were the sole source of funding to construct the steel plant.

BIL had also claimed that it invested Rs 1350 crore of its "own money" in the project, but the AP government gave the impression that only a sum of Rs 170.95 crore was spent.