The move comes after the state law department advised the industries department to substitute the earlier MoU with a fresh one mentioning the new entity.
“Kindly furnish the draft MoU to be signed between¬ industries department and M/ s Sesa Sterlite Ltd as advised by the law department in substituting the earlier MoU signed between the industries department with M/s Vedanta Aluminium Ltd on the wake of amalgamation of VAL with M/s Sesa Sterlite,” said S C Nayak, additional secretary with the industries department in a letter to Industrial Promotion And Investment Corporation Of Odisha Limited (IPICOL).
Though the decision to merge VAL with Sesa Sterlite was taken almost two years ago along with other Indian subsidiaries of the London-listed Vedanta Resources Plc, the process of the amalgamation got completed only in August 2013.
The scheme of amalgamation and arrangement was proposed for Sterlite, Malco, Sterlite Energy, Vedanta Aluminium and Sesa Goa and their shareholders and creditors. As per the plan, Malco’s power plant has been transferred to Vedanta Aluminium. The move was aimed at creating a pan Indian natural resources company in line with global giants such as BHP Billiton. The other benefits of the restructuring process included debt transfer and annual saving upto Rs 1,000 crore.
The key feature of the fresh MoU will be the provision for raw material guarantee as the state government has taken a policy initiative of not to offer the natural resources to metal and power companies in new MoUs. IPICOL officials declined to comment about the raw material clause saying they are in the process of preparing the draft MoU.
In the earlier MoU, the Odisha government had committed that it will provide bauxite to VAL from the Niyamgiri mine of Odisha Mining Corporation (OMC). However, VAL could not source the raw material from Niyamgiri due to stiff protest from tribals residing in the area.
Though Odisha government is keen to provide raw material to the companies who have already invested several thousand crore rupees in plant construction, a couple of legal cases dragging it to courts over raw material supply guarantee compelled it to strike out the norm in all future MoUs.
However, it has set up an inter ministerial group (IMG) to propose guidelines for supplying raw material to steel and metal companies of Odisha, who have made investment. The report of the IMG is yet to be tabled in the assembly. The IMG recommendation may come before the new government for approval after the ensuing assembly election in the state.