The recommendations to cancel coal block allocations could cast a cloud of uncertainity over the 2,250-Mw Navabharat power project in Odisha.
The Central Bureau of Investigation has filed a first information report against Navabharat Power Private Ltd for selling the company to Essar Power Ltd in an irregular manner, after getting coal allocation in the Rampia block. London-listed Essar Energy Plc, the holding company for Essar Power Ltd, said it had not taken a decision to shelve the project. “As of now, we are going slow on the project, pending some regulatory approvals and land acquisition,” said an Essar spokesperson.
Odisha government said it had not got any update from Essar on the status of the project.
Essar Power had bought stakes in Navabharat in two tranches in July 2010 and April 2011 for Rs 230 crore.
Meanwhile, the state government said they have not received any update from Essar Power about the status of power plant project progress.
“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 Even 6 (1) notification issued earlier under Land Acquisition Act is no longer valid as the MoU signed with the company (Navabharat) has expired.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,” said a highly placed official source.
The proposed 2,250-Mw coal-fired plant at Meramundali in Dhenkanal district requires 1,200 acres and 5,057 million tonnes of coal every year. The IPP venture has been granted water allocation and other pollution board and environment clearances along with coal linkage for 1,050 Mw power generation apart from allotment of coal block at Rampia, which has been jointly allocated to six companies.
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In the original MoU, Navabharat had committed to start the first unit of the project comprising 525 Mw output by Januray 2014. The project may not see the light of the day if the IMG recommends scrapping of its Rampia coal block.
However, Essar Power might not let go the project easily as it has invested Rs 500 crore so far apart from its acquisition cost of Rs 230 crore, the company said recently.
“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, when the CBI filed FIR against Navbharat.