New MoUs mandate IPPs to retain at least 51% stake

The independent power producers (IPPs) have 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, as per the new draft memorandum of understanding (MoU) framed by the state government.

“The IPPs cannot dilute their stake holding to below 51 per cent for at least three years from the date of commencement of their operations. Also, any stake sale beyond this lock-in period will need prior permission of the state government,” said a senior energy department official.

Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol) has prepared draft MoUs to be signed with those IPPs whose original pacts have lapsed. Out of 29 MoUs signed by the state government, the validity period of 19 MoUs has expired posing hurdle to the progress of the concerned projects.

Due to the expiry of MoUs, financial institutions are reluctant to provide funds to the developers.

The IPPs whose MoUs are awaiting extension include Tata Power, GMR Kamalanga Energy Ltd, Navabharat Power Ltd, Visa Power, Sterlite Energy Ltd, Lanco Power and KVK Neelachal Power to name a few.

According to the terms set in the new draft MoUs, the IPPs have to comply with the mandatory clause to promote employment among locals. The clause stipulates that industries setting up their projects in the state have to reserve 90 per cent jobs for locals in the unskilled and semi-skilled category, up to 60 per cent in skilled category and 30 per cent for the supervisory and managerial cadre while giving them the option to fill up the post of senior executives from the open market.

The IPPs also have to take steps to develop ancillary and downstream units around the mother plant.

So far, two IPPs — Sterlite Energy and GMR Kamalanga Energy — have commissioned their units. While Sterlite Energy has fully operationalised its 2,400 Mw coal-based plant at Burkhamunda near Jharsuguda, GMR has put on stream two 350 Mw units of its plant at Kamalanga in Dhenkanal district.

Seven more IPPs are expected to go on stream by the end of 2013-14- GMR Kamalanga Energy Ltd, Jindal India Thermal Power Ltd (JITPL), Monnet Power Company Ltd, Lanco Babandh Power Ltd, KVK Nilachal Pvt Ltd, Maa Durga Thermal Power Company Ltd and Nava Bharat Power Pvt Ltd.