Coal block deallocation fear clouds Navbharat power project in state

Amid widespread anticipation that the Inter Ministerial Group (IMG) might recommend cancellation of more coal block allotments after naming four such distributions last week, the promoters of Navabharat power project and sources in Odisha government said there is uncertainty over the 2,250 MW power project of the company in the state.

The Central Bureau of Investigation (CBI) has filed an FIR against Navabharat Power Private Ltd for selling the company to Essar Power Ltd in an irregular manner after getting coal allocation in Rampia and Dip side of Rampia blocks in western Odisha.

London-listed Essar Energy Plc, the holding company for Essar Power Ltd, said as of now it has not taken a decision to shelve the project, but said, it was going slow on Navabharat project with Independent Power Producer (IPP) status.

“As of now we are going slow on the project pending some regulatory approvals and land acquisition,” said a spokesperson for Essar Group.

Essar Power had proposed to set up a 1,000 MW power plant at Paranga near Angul in 2006, but did not make any effort to renew its MoU (Memorandum of Understanding) with the state government which expired in 2009 and even did not acquire any land for the proposed plant. It later bought 100 per cent stake in Navabharat in two tranches in July 2010 and April 2011 for Rs 230 crore.

Meanwhile, the state government said they have not received any update from Essar Power about the status of power plant project progress.

“No land has been acquired yet for Navabharat Power. Even 6 (1) notification issued earlier under Land Acquisition Act is no longer valid as the MoU signed with the company (Navabharat) has expired. The land procurement process has to begin anew for the project,” said a highly placed official source.

The proposed 2,250 MW coal-fired plant at Meramundali in Dhenkanal district requires 1,200 acre land and 5,057 million tonne coal every year. The IPP venture has been granted water allocation and other pollution board and environment clearances along with coal linkage for 1,050 MW power generation apart from allotment of coal block at Rampia, which has been jointly allocated to six companies.

In the original MoU, Navabharat had committed to start the first unit of the project comprising 525 MW output by Januray 2014. The project may not see the light of the day if the IMG recommends scrapping of its Rampia coal block.

However, Essar Power might not let go the project easily as it has invested Rs 500 crore so far apart from its acquisition cost of Rs 230 crore, the company said recently.

“Essar Power has invested more than Rs 500 crores in developing the project and has also achieved financial closure, with ICICI Bank having underwritten debt financing of more than Rs 3,720 crore,” the Ruias-controlled firm said in a statement on September 5, when the CBI filed FIR against Navbharat.