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Odisha government starts taking back land from failed power projects

To secure long-term power security, the state government had signed pacts with 30 IPPs, envisaging generation capacity of 37,000 Mw

Jayajit Dash  |  Bhubaneswar 

Thermal power
Thermal power

Odisha has launched the crackdown on frivolous thermal power producers. The state government has kicked off the process of resuming land from developers of failed power projects.

To secure long-term power security, the state government had signed pacts with 30 IPPs, envisaging generation capacity of 37,000 Mw. Later, two MoUs (memorandum of understanding) signed with Essar Power and Vijay Ferro Power were scrapped for unsatisfactory performance on the projects. Most of the remaining proponents have not evinced interest to install their projects primarily due to lack of coal linkages and drying out of long-term power purchase agreements (PPAs). Key players such as Chennai-based BGR Energy Systems and CESC Ltd have offered to surrender lands acquired or identified for their projects. Kalinga Energy & Power Ltd, an Odisha-based developer has also written to the state government, indicating an intent to shelve its 1000 Mw coal-fired power plant.

“To start with, the state government intends to take back 1900 acres land identified or alloted to CESC and BGR Energy. The land would be added to the state's land bank which has a pool of 121,000 acres”, said an official source.

Most of the IPPs in Odisha have remained non-starters. Only Vedanta Ltd and GMR Kamalanga Energy Ltd, the subsidiary of GMR Energy are successfully running operations. Projects by other proponents like B C Jindal controlled Jindal India Thermal Power Ltd (JITPL), Lanco Power and Maa Durga who have commissioned their projects have almost turned into stranded assets dogged by lack of coal availability or PPAs or both. Ind-Barath Energy Utkal Ltd, a subsidiary of Hyderabad-based Ind Barath Infra Power Ltd, despite a firm long-term PPA and coal linkage is stranded as it turned an NPA (non-performing asset) for lenders. Both JITPL and IBEUL which were initially referred to the National Company Law Tribunal (NCLT) are now amongst the 11 shortlisted power projects for resolution under Scheme for Asset Management & Debt Change Structure (Samadhan).

Walking away of thermal producers from their projects has posed a threat to Odisha's potential to emerge as a thermal power hub. Weak power demand, lack of coal block or firm linkages, delay in land acquisition and difficulty in raising credit has prompted the promoters to draw back their plans. Between 2000 and 2014, Odisha signed MoUs with 30 IPPs with a total generation capacity of 37,000 Mw.

The state government, however, is unruffled by the exit of some IPPs. Allocation of 800 Mw as state share from NTPC's ensuing 1600 Mw super thermal power plant and the entire 1320 Mw to feed the state grid from the ongoing expansion of state owned Odisha Power Generation Corporation (OPGC) will ensure a glut of thermal power by 2020. “From 2020 onwards, Odisha will be in a position to trade surplus power”, said the official.

First Published: Tue, June 26 2018. 17:58 IST
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