Odisha begins scrutiny of pact with Navabharat Power

The Odisha government has begun scrutiny of the Memorandum of Understanding (MoU) signed with Navabharat Power Ltd after questions were raised regarding the sanctity of the pact signed with the power producer.

Opposition political parties had cornered the state government after the Central Bureau of Investigation (CBI) filed an FIR (first information report) against Navabharat Power for stake sale to Essar Power in an irregular manner. Navabharat Power had won the Rampia and Rampia dip side coal blocks jointly with five other companies in 2008 for its 2,250 MW coal-fired power plant proposed at Meramundali near Angul.

The Opposition had questioned the basis of state recommending coal block in favour of Navabharat Power in 2007.

 

“The MoU signed with Navabharat Power and the recommendation for coal block made in favour of the company is being scrutinized,” said energy minister Arun Kumar Sahoo.

The minister said the MoU with Essar Power that has acquired Navabharat Power, has been cancelled.

Senior BJP leader and former industries minister B B Harichandan demanded thorough probe into all coal block allocations made by the Centre and recommendation sent by the Odisha government for the purpose.

Recently, the state energy department had sought a detailed response from Navabharat Power regarding the status of its MoU and the proposed power project.

“No land has been acquired yet for Navabharat Power. Even 6 (1) notification issued earlier under Land Acquisition Act is no longer valid as the MoU signed with the company (Navabharat) has expired. The land procurement process has to begin anew for the project,” a highly placed official source had earlier told Business Standard.

Navabharat Power had signed MoU with the Odisha government in June 2006 for setting up the power project.

An Essar Power source had informed Business Standard that while they had not taken any decision to shelve the project, the company was going slow on project execution.

In the original MoU, Navabharat had committed to start the first unit of the project comprising 525 MW output by January 2014.

Essar Power had earlier said it had invested more than Rs 500 crore on the power project in addition to the acquisition cost of Rs 230 crore.

“Essar Power has invested more than Rs 500 crores in developing the project and has also achieved financial closure, with ICICI Bank having underwritten debt financing of more than Rs 3,720 crore,” the Ruias-controlled firm said in a statement on September 5.