Sajjan Jindal on Friday. Picture by Kishor Roychowdhury

Calcutta, July 25: The government’s efforts to build a deep-sea port suffered a setback today with a prospective developer finding a more suitable location in Orissa.

Sajjan Jindal said: “We had looked at locations near Digha. But there were two problems — silting and cyclonic weather. These will push up maintenance costs and make it unviable.”

His JSW Group has zeroed in on a spot in Orissa bordering Bengal, on the mouth of the Subarnarekha. The Rs 1,500-crore port would be 250km from his proposed steel plant in Bengal’s Salboni.

Jindal wants the port to import coal and iron ore and ship out semi-finished steel.

Industries secretary Sabyasachi Sen, however, said Jindal’s pullout was not a worry. “It was not their primary pro-ject. When a deep-sea port comes up (in Bengal), the Jindals will also use it. We are going ahead with the port plan,” he said.

Jindal, however, had more bad news. The Salboni plant, he announced, would have a 3-million-tonne capacity in the first phase, instead of the 6mt considered earlier.

The Telegraph had earlier reported that JSW Steel might scale down the project because of the volatile financial market worldwide. The central clampdown on steel — restricting price and exports — may also have dampened spirits.

The silver lining is that work on the Salboni project is set to begin. “Construction will begin in the first week of November. The plant will go on stream in 2011-12,” Jindal said on the sidelines of a meeting of industry body Assocham.

Once all the phases are completed, the plant will have a capacity of 10 million tonnes. It will also have a 600MW captive power plant and a cement unit. The total investment will be Rs 35,000 crore.

He may have dropped the port plan, but Jindal today showed interest in developing a power plant for commercial generation.

“If allowed, we can do 3,000-4,000MW… the state has huge potential,” he said.

The JSW Group vice-chairman took up the issue with the chief minister when he met him this afternoon. Buddhadeb Bhattacharjee agreed to look into the proposal.

JSW Power is building plants in several states with a total capacity of 11,000MW.

JSW’s Salboni compensation model — to give shares, jobs and cash to landlosers — has been accepted by Jharkhand in its new rehabilitation and resettlement policy. “I am sure it’ll become a benchmark across the country,” Jindal said.