Bhubaneswar, July 17 (IANS): With Posco making it clear that it would put the proposed $12 billion steel mega-project in Odisha on hold, the state government on Friday said the state would not suffer industrially following the decision of the South Korean company.

Steel and Mines Minister Prafulla Mallick said his government was still optimistic about the Posco project coming up in Jagatsinghpur district.

He said the state government has not received any written intimation from Posco about freezing of the project.

The minister denied that the backing out of Posco from Odisha would have any adverse impact on the investment flow and industry sector.

"The state would not suffer industrially following the decision of Posco. The government has already inked 49 MoUs with steel companies while 32 firms have already started production. And we hope that the remaining projects will see daylight soon," said Mallick.

However, industry experts feel that it would have a cascading effect on investment in the state particularly when the government has targeted attracting investment of Rs.1.73 crore by 2019-20.

Meanwhile, union Petroleum Minister Dharmendra Pradhan held the state government solely responsible for the discouraging development.

He said Posco was backing out from its project due to the lackadaisical attitude of the state government.

The South Korean company has decided to put its steel project on hold after it faced numerous problems starting from land acquisition to raw material linkage.