MoU extension of nine IPPs mired in uncertainty

Tata Power, CESC, Bhushan Energy in list

The lapsed memorandum of understanding (MoUs) of nine independent power producers (IPPs) may not be extended since the project proponents are yet to commence construction work.

Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol) checked the ground level progress made by these IPPs through a recent field verification.

The nine IPPs include Bhushan Energy Ltd, CESC Ltd, Tata Power Company Ltd, Visa Power, Arati Steel Ltd, Sahara India Power Corporation Ltd, BGR Energy System Ltd, JR Powergen Ltd and Mahanadi Aban Power Company Ltd.

“Ipicol has assessed the status of these power projects by making field visits to the project sites recently. The field visits were meant for recommending renewal of their expired MoUs. But progress made by the developers is not satisfactory and so the government may hold up extension of their pacts,” said an official source. Bhushan Energy had proposed to set up a 2,000 Mw coal-fired power plant at Ghantigadia near Angul at a cost of Rs 8,483 crore. The 1,320 Mw (2x660) coal-based power plant of Kolkata-based CESC Ltd proposed at Neulapoi near Dhenkanal is awaiting environment clearance.

Mahanadi Aban Power Company Ltd has achieved financial closure on August 18, 2012, with a loan agreement of Rs 5,847.58 crore with Rural Electrification Corporation (REC), Power Finance Corporation (PFC) and Axis Bank. The company has placed engineering & procurement contract (EPC) with Tata Projects Ltd. It has also finalised BTG (boiler-turbine-generator) contract with Harbin Electric International (China) and Toshiba India Pvt Ltd-Gurgaon. The project has secured coal linkage of 4.27 million tonne per annum from Mahanadi Coalfields Ltd (MCL).

The state government had signed MoUs with 30 IPPs that promised a combined generation capacity of around 37,000 Mw. The state's share from these projects was pegged at about 6,000 Mw. Vedanta Resources owned Sterlite Energy is the first IPP to have gone into production. The company has commissioned its 2,400 Mw plant at Burkhamunda near Jharsuguda.

GMR Energy, another MoU based proponent has commissioned two 350 Mw units out of 1,400 MW project at Kamalanga in Dhenkanal district.

The other IPPs that are expected to go on stream by 2013-14 are Lanco Babandh Power Ltd, KVK Nilachal Pvt Ltd, Ind-Barath Energy (Utkal) Ltd, Maa Durga Thermal Power Company Ltd, Jindal India Thermal Power Ltd (JITPL) and Nava Bharat Power Pvt Ltd.

As many as 19 IPPs were awaiting renewal of their lapsed MoUs. The state energy department had prepared the draft MoUs which mandate the IPPs to retain at least 51 per cent stake in their power projects for a minimum of three years from the date of commissioning of their plants.