Companies & Sectors
UMPPs get a boost due to delinking of clearance formalities

The strategic move by the MoEF should be applauded and hopefully, a number of pending cases of UMPPs will now progress

In a strategic move, which has been long overdue, the Ministry of Environment and Forests (MoEF) has decided that the UMPP (ultra mega power projects) will no longer be linked to obtaining clearances of their captive coal blocks. In the past, mines and power stations were considered a single component for green clearance. This notification appears to have been issued on 31 December 2013, and so, we may as well consider this move as a New Year gift!

 

It may be remembered that the power plants could not apply for environmental approvals till the time they got their coal block stage I (forest clearance). This is expected to speed up many pending cases.

 

In the case of Odisha power project, it is entirely dependent upon getting domestic supplies of coal, unlike its counterpart at Cheyyur in Tamil Nadu, which will be fired with domestic coal. It is an entirely different and difficult issue of overseas coal imports, when the country has substantial proven coal reserves, as Coal India (CIL), the sole supplier has too many problems on hand, including fall in production in the year.

 

It is interesting to note that, recently, while speaking at the Ravi Mathai Memorial Lecture, Arvind Kumar, joint secretary, in the Ministry of Finance, is reported to have stated that about 400 projects, worth an estimated Rs17.68 lakh crore covering power, steel coal, mining and petroleum industries were pending with the Cabinet Committee on Investments, for clearance. He further stated that "there is an urgent need to ease the logjam, improve quality of infrastructure to get commissioned and financed projects going". This is a tall order under the present circumstances, but, with some effort, it is not an impossible task to overcome.

 

It appears that KV Kamath, who appears to have attended the above meet, also felt that "the economy was given a wrong medicine in the form of increasing interest rates" and that "the there has been a significant drop in the financing of infrastructure projects at the ICICI bank in the past two years".

 

Reverting back to the Odisha UMPP 4000 MW (mega watt) power project at Bedabahal, it may be remembered that the Ministry of Coal had allocated three coal blocks (Meenakshi, Meenakshi B and dip side of Meenakshi) on 13 September 2006. Due to the apparent lack of adequate progress, now, the Ministry of Coal has issued a show cause notice to Power Finance Corporation, on 24 December 2013, seeking an explanation for the slow progress. It would be interesting to know why the Ministry has taken so long in following up the matter.

 

PFC (Power Finance Corporation) has invited the bids and expects to finalise the winner, who promises to generate electricity at the cheapest rate, bearing in mind that Odisha UMPP will solely depend upon domestic coal. The nine bidders are JSPL, NTPC, Adani Power, JSW, Sterlite Inventure, CLP India, NHPC and Larsen & Toubro. If the past performance is any criterion, India has awarded four UMPPs, out of which, only Tata Power has a fully operational power plant at Mundra, in Gujarat, while three others, awarded to Reliance Power, are in various stages of construction.

 

It now remains to be seen that, with the new change and notification of policy, all concerned officials and departments will expeditiously clear pending issues, so that project clearances are no longer the impediments in completion. Likewise, it is hoped that work will also move at a faster pace in the case of Tilaiya UMPP 3960 MW project, which Reliance Power bagged in 2009, and which has been unable to make much headway due to land acquisition problems.

 

According to the UMPP model, the government is obliged to extend all support for expeditious "clearances", and the contractual obligation actually to start when the required land is handed over for the main plant area. In the case of Tilaiya, for instance, Stage I (obtained in February 2010) and Stage II (November 2010) clearances have been obtained by the contractor, but the state government has yet to approve the transfer of possession of land to the project. The central government must be able to give a directive for doing the needful, because, ultimately, it is the nation that suffers.

 

Recently, a prime minister-headed panel had discussions on land issues with the power ministry, when the later wanted the later wanted the investment panel to advice the MoEF "to treat all UMPPs as central government undertaking projects as far as compensatory afforestation was concerned". Such a move would help the successful bidder of the UMPP to simply deposit the cost of land with the state government, under the Forest Conservation Act, and move on with the work. In the case of Reliance project at Tilaiya, MoEF took a stand that Reliance Power "is not a central government Undertaking". In this case, MoEF is certainly right in their standing, but we need to move on with the work and they need to work out a compromise formula so that any further delay can be avoided.

 

This strategic move by the MoEF should be applauded and hopefully, a number of pending cases will now, hopefully, progress.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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COMMENTS

Prasenjit

3 years ago

Whether PFC got the PL?

Prasenjit

3 years ago

Whether PFC got the Production Licence?

RBI Warns against Usage of Bitcoin and Virtual Currencies

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