Ranchi, Nov. 6: In a setback to the ailing Heavy Engineering Corporation, the Centre has decided to “surrender” nearly 1,700 acres of unutilised land belonging to the public sector undertaking to the Jharkhand government.

The deal was pushed through after chief minister Arjun Munda met Union heavy industries minister Subodh Mohite in Delhi recently and sought his cooperation in the larger interests of the state. The land is to be allotted for setting up a special economic zone.

The company had been opposing the transfer of the land as it wanted to put it up for sale for its revival. Sources said the presence of a “friendly” government in Delhi, which favours divestment of public sector units, made all the difference.

According to the sources, Munda, at his meeting with the Union minister, stressed on the need to set up a special economic zone in Ranchi, besides the one at Adityapur, to ensure “rapid development” of Jharkhand, which was carved out of Bihar three years ago.

“The chief minister further pointed out that though all the land was acquired for the setting up of HEC, more than four decades later, acres after acres had been lying unutilised,” the sources added.

The chief minister, they said, managed to impress upon the Union minister that a portion of such unutilised land could be better utilised by the state government for setting up the special zone.

“The issue of coming out with a suitable revival package was also discussed between the two ministers,” insiders said. As part of its carrot-and-stick policy, the Centre persuaded the chief minister to give Rs 60-70 crore to the cash-strapped company to help it meet its working capital requirements.

As a further sop, the state government agreed to allow the company to pay power bill arrears, estimated at Rs 650 crore, in suitable instalments, the sources said.

On the terms of transfer, Munda pointed out that since it would involve the state government and the Centre, “commercial interests” were better abandoned. The sources revealed that after much haggling, the Centre agreed to Munda’s suggestion and transfer the land at the same rate at which it was acquired in 1962 by the then Bihar government for setting up the company.

“The Centre has also agreed to allow the state to pay up the amount in ‘suitable’ instalments,” insiders added.

At least 3,500 acres belonging to the company are still lying unutilised which local tribals, including many of their original owners, are using to grow crops. The issue of the vacant land had been hotting up over the past seven months with both the company and the state government claiming ownership.

While the company had been asking the Centre to permit it to raise necessary resources for sale of the surplus and vacant land, the state land revenue ministry, through a public notice, prohibited sale or transfer of the land. Land revenue minister Madhu Singh, in a note to the Ranchi deputy commissioner, had ordered commencement of proceedings to reclaim all the areas unutilised by the company.