The ambitious Rs50,000 crore Hajigak iron-ore mining project in Afghanistan, which had been bagged by a SAIl-led consortium way back in November 2011, and that has till now failed to take off owing to security and other technical issues, may now get further delayed as that country's mining laws are undergoing amendment.
The delay may be longer and the future of the project looks all the more uncertain as Afghanistan is facing presidential elections next month and owing to this the proposed amendments - which are still awaiting clearance from the Parliament - may have to wait for the new Government to take charge.
According to sources privy to the developments, the mining laws have been designed to support private investments in the country and mainly to protect the interests of investors considering the fragile security environment prevailing there.
They added that the prevailing mining laws of Afghanistan are of an ad-hoc nature and therefore in order to kick start a project of such magnitude, necessary changes were required in the legislation. However as the amendments are currently held up in Parliament, the future of these changes would very much depend on the new regime which comes to power in April there.
The amendments while talking about protecting foreign investments, stress on the need to provide security to companies which are funding projects in the war-torn nation. Even the Indian Government had underlined the need for providing security to the workforce which would be involved in initiating the Hajigak iron-ore mining project.
SAIl Chairman C S Verma while not divulging much details about the progress into the project, had indicated that the mining laws of Afghanistan are undergoing changes and on an earlier occasion had stated that security is an issue which is of paramount importance.
In fact in between there were even talks of Afghanistan having proposed the constitution of a special security force to safeguard the personnel who would be working Hajigak region for the project.
The project, apart from development of iron ore mines situated in Hajigak, also involves building of evacuation infrastructure, setting up a 6 million tonnes steel plant and constructing a 1,000 MW power plant there. Hajigak is situated 100 km west of the Afghan capital Kabul.
Hajigak has 1.8 billion tonnes of reserves of high-grade iron ore and is the world's second largest deposit of the mineral.
The Indian consortium, called AFISCO or Afghan Iron and Steel Consortium, includes three state-run firms - SAIl, National Mineral Development Corporation (NMDC) and Rashtriya Ispat Nigam ltd (RINl). It also includes four private steelmakers - JSW Steel, JSW Ispat, Jindal Steel and Power and Monnet Ispat.
Apart from security issues and delays in getting the mining laws amended, Afghanistan is also afflicted with a major problem and that is lack of a well stretched railway network.
In fact till now, according to sources, the strategy of that country has been to ask companies investing there, to help build rail connectivity which would help in transporting the raw material from the mines to the nearest port.
In case of Hajigak project though Verma had once stated that the consortium is expecting Afghanistan to provide it with the basic rail-road facilities to transport the raw material (iron-ore).
To further compound the problem, with the US troops scheduled to begin their withdrawal from the war-torn nation later this year, investors are quite skeptical about their investments in the country and are having second thoughts about establishing their footprints.
While India till now has not shown any reaction, the Government may adopt a wait and watch policy on Hajigak project what with even lok Sabha polls scheduled for next month.