NLC's 3,200 Mw Odisha project at stake on power allocation issues

NLC India's (formerly Neyveli Lignite Ltd) 3,200 Mw thermal power project proposed in Odisha has run into the rough water due to differences with the state government over power allocation.

The state government, in line with its policy terms for the Independent Power Producers (IPPs), has demanded allocation of 14 per cent power at variable cost. NLC, however, has objected to the demand saying it does not apply to a central PSU.

"NLC India has written to the state government, seeking a waiver of the demand for 14 per cent power. The central PSU says the condition does not apply to it since it is not an IPP", said an Odisha government official in the know.

Chennai-based Navratna company NLC India has committed an investment of Rs 118.75 billion on the 3200 Mw coal-fired plant to come up at Tareikela near Jharsuguda. The chosen site for the thermal power plant is in the vicinity of Talabira-II and Talabira-III coal blocks won by the company in Odisha.

Aside from coal-based generation, NLC has committed an investment of Rs 22.50 billion on a string of solar power projects in Odisha with a capacity totaling 300 Mw. The solar power plants are targeted for multiple locations.  The locations for solar power projects were yet to be decided as the state government was struggling to alienate patches of contiguous land for such projects.

NLC's total investments proposed in Odisha is around Rs 140 billion.

The central public sector enterprise saw its net profit for the December quarter fell seven per cent to Rs 3.14 billion after it recorded lower income from lignite mining and power generation. Income from lignite mining fell 15 per cent to Rs 11.11 billion, while power generation dropped 15 per cent to Rs 17.65 billion. 

NLC has shortlisted two stressed power assets for acquisition — Damodar Valley Corporation's (DVC) Raghunathpur plant in West Bengal and the GMR plant in Chhattisgarh. The Ministry of Coal has already given approval to NLC to go ahead with the DVC acquisition. 

NLC aims to double its lignite mining capacity to 62.15 million tonnes per annum (mtpa) by 2025 from 30.6 mtpa now. It is also planning to scale up renewable energy capacity to 4250 Mw by then.