CIL arm to produce pithead power

Our Bureau Kolkata | Updated on November 25, 2017 Published on November 09, 2014

Mahanadi Coalfields plans to set up ₹11,000-crore plant in Odisha

The board of Coal India Ltd has cleared a long-pending proposal of the national miner to set up a 1,600 MW pithead power plant in Odisha.

“The board has approved the detailed project report for the (2X 800) facility entailing an investment of ₹11,000 crore,” AN Sahay, chairman of Sambalpur-based Mahanadi Coalfields, told BusinessLine. A wholly owned subsidiary of Coal India, MCL contributes nearly a fourth of the total group production that is growing at 15 per cent a year.

Sahay said nearly 800 acres at the coal-rich Sundergarh district has been earmarked for the project. The land was originally acquired for coal mining. Once the detailed project report (DPR) is cleared, the company will ask the Centre’s permission for land-use change. While the 7-8 million tonnes annual fuel requirement can be sourced from the nearby mines, the Odisha Government has offered 50,000 cusec (cubic ft per second) water for the project.

The State is ready to pick up 50 per cent of the power generated by the project. This is over and above the State quota of 15 per cent supplied on variable cost basis. MCL will use 5 per cent of the power. The rest is yet to be tied up.

Once the DPR is approved, MCL will seek environmental clearance. Since the land has a forest component and detailed reconciliation, as prescribed under the Forest Rights Act, is a time consuming affair, MCL should take at least 18 months to enter the construction phase. The plant will be run on a management contract basis.

New mines

At Saturday’s meeting, the Coal India board also approved five new mining projects. However, two large projects such as Garjanbahal (13 mt) in Odisha and Pelnma (15 mt) in Chhattishgarh will take years to start production. Garjanbahal is linked to the 52-km Jharsuguda-Barpalli-Sardega rail link that will take at least two years to become operational. Pelnma is linked to the Bhupdeopur-Raigarh-Mand (180 km) line. Construction of the project is yet to begin.

However, sources say the smaller projects of Makar-Dokra (4 mt) in Western Coalfields; and New Kenda and Nimcha-Sripur (4 mt) in Eastern Coalfields will be operational in two years.

But the best news was for West Bengal-based Eastern Coalfields. Chairman Rakesh Sinha says the board has approved a ₹2,051-crore package to bring the subsidiary out of the Board for Industrial and Financial Reconstruction.

As per the package, ECL will issue preferential shares of identical value, redeemable in seven years offering 6 per cent dividend. This will help book transfer of loan liabilities (offered by Coal India in the past to ECL) into equity and make the company net worth positive.

ECL ended the last fiscal with a negative net worth of ₹1,536 crore. This is a marked improvement from the negative net worth of ₹6,340 crore reported five years ago. “The company has been making profits for the last five years,” Sinha said.

Published on November 09, 2014

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