Tata Steel's [Get Quote] $5 billion steel project in Vietnam has hit a roadblock, thanks to a delay in land allocation. This has forced India's largest steel maker to extend its deadline for commissioning the first phase of the 4.5 million tonne per annum plant by at least a year from 2010.

A Tata Steel spokesperson confirmed that the first phase of the plant is now expected to be commissioned only in 2011. According to him, the delay has taken place because of the large number of projects that have been proposed in that economic zone.

"The authorities are trying to accommodate all the projects. At present, they are trying to work that out by modifying the master plan of the economic zone," he added.

Vietnam's planning department has given the necessary clearances for the land earmarked for the Tata plant. However, the actual allotment has got delayed because of a Taiwanese company which has also sought land for building its plant there.

Tata Steel had entered into a joint venture with Vietnam Steel Corporation and Vietnam Cement Industries for building the integrated steel mill in the Ha Tinh province. For the plant, the company requires 1,100 hectares of land.

An official Indian delegation which recently visited Vietnam had raised this issue with the local government representatives in Hanoi. "This project is a milestone for the economic relationship between Vietnam and India and hence both the governments look forward for the successful implementation of this project," said the Tata Steel spokesperson.

According to the joint venture agreement, Tata steel will have 65 per cent stake in this project. The agreement entitles the company to hold 30 per cent equity stake in an iron ore mining project in Vietnam. The raw materials for the project will be sourced mainly from Vietnam.

Tata Steel's new projects in Jharkhand, Orissa and Chhattisgarh have also got delayed due to land acquisition problems. The company's proposed titanium dioxide project in Tamil Nadu is also delayed because of issues related to land allotment.