Vedanta to buy 200 Mw in Odisha after pollution board crackdown

Odisha Pollution Control Board orders temporary closure of 3 units of 1215 Mw

Faced with a partial closure notice from the Odisha Pollution Control Board (SPCB) on its power generating units, Vedanta Ltd would have to opt for buying 200 Mw power from external sources. The procurement of costlier power is likely to have a bearing on its cost of aluminium production at Jharsuguda.

The SPCB has slapped partial closure directions on Vedanta's 2,400 Mw coal-fired power plant and captive power plant (CPP) of 1,215 Mw capacity, both located in Jharsuguda in the vicinity of its aluminium smelter unit.

As a consequence of the SPCB crackdown, Vedanta needs to buy 200 Mw to tide over the temporary power crunch.

The SPCB's notice comes after a breach in Vedanta's ash pond embankment near Katikela village near Jharsuguda on August 28. It had led to inundation of ash in agricultural lands at the site, triggering public outrage.

The pollution watchdog has revoked the Consent to Operate for some Vedanta power units. It has asked the company to suspend operations of two 600 Mw units of the 2,400 Mw IPP (Independent Power Producer) and three units (3x135 Mw) of the CPP complex. After the order, power generation by Vedanta at Jharsuguda would be restricted to 1,200 Mw for IPP and 810 Mw at CPP.

The remaining units of the 1,215 Mw plant have been allowed to operate until October 12, 2017 and those of the 2,400 Mw unit till September 20, 2017.

The SPCB has asked the company to ensure compliance with certain conditions and come up with a concrete plan in five days.

The closure order from SPCB would marginally impact the cost of metal production, Vedanta said in a statement. In last fiscal, the company's cost of production (CoP) of aluminium fell seven per cent to $1,463 per tonne, helped by lower alumina cost, volume ramp up, rupee appreciation and implementation of various cost saving initiatives. For 2017-18, Vedanta's average aluminium CoP is projected to be in the range of $1,475-1,500 per tonne.

"The company is complying with the order of SPCB along with a request for revoking the said closure orders. This action may require a temporary power purchase of up to 200 Mw, and hence a marginal impact on cost of production of aluminium. The company expects to be able to sustain the smelter capacity without affecting its production volume", Vedanta said in a filing with the BSE.

The company is working towards the lifting of the SPCB closure orders at the earliest, to ensure that aluminium production is not affected, it added.

Earlier, the SPCB had served a show cause notice to Vedanta over the collapse of the ash pond and asked it to submit an explanation on reasons for not revoking the consent granted to the smelter and the CPP.