The expansion of the 2000 mw Thalcher power project in Orissa may be scrapped due to the state government's demand for 12 per cent free power, government sources said. Orissa Chief Minister J B Patnaik has reportedly written to the Centre demanding 12 per cent free power from the project. But giving away 12 per cent free power would make the project unviable, sources said.
The Rs 7,000 crore National Thermal Power Corporation (NTPC) project ran into rough weather when the corporation failed to tie up funds from the World Bank following India's nuclear tests. The corporation had sought a Rs 3,000 crore loan from the bank.
The finance ministry, too, turned down NTPC's proposal to raise $1 billion through external commercial borrowings for part-financing the project.
The delay in finalising finances stalled the corporation's plans to open bids for equipment contracts. Union power minister P R Kumaramangalam, however, said finances were not the problem. "It is, in fact, the Orissa government's demand for 12 per cent free power. This will make the project unfeasible."
NTPC sources said they had not received any communication from the state government, but added that 12 per cent free power would render the project uneconomical. A NTPC spokesman declined to comment on the possibility of the project being scrapped. Orissa has also jeopardised the Rs 16,000 crore CEPA project, the country's largest private power project, by making a similar demand for free power. The promoters of the 4,000 mw project have refused to go ahead with the project until the state government withdraws its demand.
Supplying free power from inter-state projects set up at pitheads in Orissa will tax states that are to receive power from. For instance, 12 per cent free power from the CEPA project will cost other states and the promoters Rs 850 crore, completely upsetting tariff calculations. Kumaramangalam has already written to the state government asking it to withdraw its demands. Sources in the power ministry warned that Orissa would "find it very difficult to attract any future investment in the power sector if it continued with its demands".
