Project Report on “Stakeholder Analysis of POSCO Steel Project in Odisha”

Submitted By

Lovepreet Singh

Jillam Parida

Suman Sekhar Pradhan

POSCO India

POSCO India Private Limited (commonly POSCO India) is an Indian subsidiary of Korean conglomerate POSCO. Its parent company POSCO signed a memorandum of understanding in June 2005 with the state government of Odisha to construct a $12 billion steel plant. Various regulatory delays and controversies prevented the company from starting construction. The memorandum expired in June 2011, and it has not been renewed yet. Apart from Odisha, POSCO India has project sites in the Karnataka state.

What is stakeholder management Who are the people who will benefit from any given development activity? And whose interests might be harmed by it? Identifying the stakeholders, large and small, individual & organizational, for any given activity is essential if all the people who could have a bearing on its success or failure are to have their voices heard. All stakeholders need to have their opinions taken into account, even if some are to be set aside at a later date.

Stakeholder Analysis allows managers to identify the interests of different groups and find ways of harnessing the support of those in favor or the activity, while managing the risks posed by stakeholders who are against it. It can also play a central role in identifying real development need — and that may mean devising a different programme from the one you thought you were about to embark upon. Stakeholder Analysis should be an integral part of programme design, and appraisal. It is also a useful technique to use during reviews, missions and evaluations.

Stakeholder analysis is a term used in conflict resolution, project management, and business administration to describe a process where all the individuals or groups that are likely to be affected by a proposed action are identified and then sorted according to how much they can affect the action and how much the action can affect them. This information is used to assess how the interests of those stakeholders should be addressed in a project plan, policy, program, or other action. Stakeholder analysis is a key part of Stakeholder management

Why do Stakeholder Analysis?

Stakeholder Analysis is used in the design and management of development programmes to identify:

The interests of all stakeholders who may affect or be affected by a programme

Potential conflicts and risks that could jeopardize a programme Opportunities and relationships to build upon in implementing a programme to help

make it a success The groups that should be encouraged to participate in different stages of the activity

cycle

Definition of Project Stakeholders

Project stakeholders are individuals and organizations who are actively involved in the project, or whose interests may be affected as a result of project execution or project completion. Stakeholders are all those who need to be considered in achieving project goals and whose participation and support are crucial to its success. So identification of all stakeholders is an important activity of the project manager to ensure project success.

A stakeholder is any person or organization, who can be positively or negatively impacted by, or cause an impact on the actions of a company, government, or organization. ‘A stakeholder is an individual or group influenced by and with an ability to significantly impact (positively or negatively) the topical area of interest’- Glicken.

Project: POSCO Orissa Steel Project

LocationJagatsinghpur District of Orissa (10 km south of Paradip Port)

Plant CapacityThe 12 MTPA integrated steelworks will be completed in three phases of 4 MTPA each. In Phase1, hot rolled coil (2.5MT) and slab (1.5 MT) will be produced. The construction for Phase1 is scheduled to be completed by 2017-18.

Project objectives: The objective of the project is to build one of the world’s most competitive steelworks with advanced technology and stable iron ore supply from captive mines, together with the economic development of Orissa

Target group

The project target group comprises the population in the catchment areas of project, as the steel plant will improve the road communication and markets benefit everybody irrespective of income and profession. It is expected that small and marginal farmers, small traders and micro-entrepreneurs, landless people and poor women will be particularly benefited due the overall development of catchment area. It is estimated that the total project beneficiaries over the project implementation period will reach about an estimated 48,000 direct and indirect jobs in the region. In addition, the construction phase will create about 467,000 man years of employment for the local population.

Potential Trouble makers

The potential trouble makers in the project would be local communities, NGO’s, opposition parties and some professional associations.For e.g. the local people in the area demanded a higher compensation with regard to land that was procured for the project. This particular action of some people influenced the public as a whole and the consequences were detrimental. The Company and the Govt. in particular faced a lot of heat to solve the issue, which in turn affected the planning of the project.

Some NGO’s also created a hassle environment for the progression of the project just to seek public attention with some vested interests. The media also added to the woes just by continuously casting a negative image of the project in front of general public.As, we know in Indian Democracy, the opposition are one of the major factors as roadblocks in different projects .In this case, the local parties spread a negative word of mouth to the public in general and influenced them to ask for better compensation and rehabilitation facilities, which were in-fact pretty high according to industry standards.

Project Partners

Several Stake holders can become partners in the project. For e.g. Suppliers and Vendors who were supplying raw material to the company can become one of the partners in the project, along with the existing customer base can be one of the leading partners in the project. In this case Govt. of Odisha is one of the partners in implementing the project within the stipulated

timeframe. Likewise, L&T and Hindustan Construction Company (HCC) can be the partners for developing the industry infrastructure of the project. Investors and the financial institutions can be the partner in the project.

Stakeholders

Stake Holder Matrix

SWOT Analysis

Stakeholders Group

Strength Weakness Opportunity Threat

Media The ability to widely distribute project information to widely vast Audience

Lack of knowledge regarding technical specification which can lead to misinformation

The exposure of information before

Promote communication and engagement

Inappropriate and misuse of media in different circumstances

EmployeessVendorSupplierAlliance & Partner

Government Board of DirectorsInvestorsLocal CommunityMedia

Prospect customerCompetitors

Political PartyNGOProfessional Associations

HighInfluenceLow

Inter

High

Low

formal announcement made

Community Knowledge of local situationCreating a very friendly atmosphere to workCan influence local peopleHelp in implementing CSR initiative

Lack of institutional Power Lack of Technical Knowledge

Enhancement of Standard of living

Community Development

Can influence local people against company Can create roadblock in executing the project

Government The ability to provide administrative support The ability provide infrastructure The ability to influence people The ability create a friendly policy and decision

The tendency to take populist decision The tendency to scramble to the pressure of NGOs and Opposition Resettlement and rehabilitation activities

Enhancing the economical state of art Creating a nurturing environment for industry

Subsequent changes in rules and regulations of government policies Unnecessary roadblock in providing license and allocated resources

Suggestions

The project implementation got delayed due to delayed acquisition of the allocated land to the project; the situation could have been avoided by implementing a community development and awareness drive before going for actual acquisition of land. A more supportive atmosphere could have been created, if the company would have adopted a fair and transparent acquisition policy of their own rather than that of Government.

Lack in Community trust building efforts as well as educating the stakeholders about the positive prospects of the project. This initiative could have played a vital role in successful acquisition of land as well as getting the community support for setting up the project.

They could have taken a holistic approach in partnering with the local NGO’s in ensuring the proper allotment of funds meant for development of local community centers, i.e. schools, hospitals and temples etc. They should have emphasized on imparting vocational training and skills building to the local community to enhance their standard of living and in turn enhance their own credibility among the local community.