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Coal block deallocation: JSW's plant may get delayed

However, post deallocation, the company will be left with no coal for the proposed power plant and would have to rework its project development plan

Press Trust of India  |  New Delhi 

JSW Steel's plans to set up a 3 million tonne steel plant in West Bengal is likely to get further delayed following the government decision to deallocate Gourangdih ABC coal mine, allotted jointly to the Sajjan Jindal-led firm and Himachal EMTA Power Ltd.

A senior JSW official said that coal from the deallocated Gourangdih block was supposed to feed a 300 MW captive power plant for the proposed steel project in West Bengal and construction activities at Salboni -- the plant site-- was supposed to begin in next one or two months.

However, post deallocation, the company will be left with no coal for the proposed power plant and would have to rework its project development plan, the official said."This could lead to further delay and escalate project cost," he said.

However, a JSW spokesperson said the company has not yet received any communication from the government in this regard (on the deallocation of the coal block) and it will be premature to comment on the issue.

"It is premature to comment when no communication is received by the company from relevant authorities yet," the spokesperson said.

The Bengal project of JSW has been delayed for various reasons since its announcement in 2007. This included a land acquisition row with the state government after Mamata Banerjee-led government took charge of the office last year.

Though the project got cleared later by the state government and land has been acquired, JSW is yet to tie up iron ore supply agreement.

The Sajjan Jindal-led firm is still firming up finances for the project, which is estimated to cost Rs 20,000 crore in the first phase.

As per the earlier plan of the company, the Bengal project was to be financed at a debt-equity ratio of 65:35 in the first phase.

The entire project is envisaged to have a 10 million tonne steel plant along with a 1600 MW captive power plant at a total cost of Rs 35,000 crore. This would require about 4,300 acres of land.

The Gourangdih ABC block, deallocated by the government last week, has an extractable reserves of 61.54 million tonne and was allocated to JSW and Himachal EMTA jointly in July, 2009.

An inter-ministerial group, which recommended deallocation of the block, has found that the project developers had failed to developed the block within the prescribed time and did not achieve critical milestones including forest clearance, grant of mining lease and land acquisition.

The mine also finds a mention in the CAG report on coal block allocation.

The Comptroller and Auditor General of India (CAG) has estimated that the financial impact of the benefit to private allottees of coal mines will be about Rs 1.86 lakh crore.

First Published: Sun, September 23 2012. 12:06 IST