In yet another sign that he can be flexible when required, minister for environment and forests Jairam Ramesh has given conditional approval for the proposed ultra-mega power project (UMPP) in Orissa promoted by public sector Power Finance Corporation (PFC). The 4,000-MW project at Bedabahal in Orissa has been held up pending environmental clearances for its captive coal blocks.
According to official sources, Ramesh has cleared the project on condition that the power ministry won?t insist on clearance for two other power projects in the UMPP?s vicinity whose captive coal blocks fall in the areas earmarked by his ministry as ?no-go? zones for mining.
Ramesh, who used to take tough and patently uncompromising stands on big industrial project with potentially serious environmental implications, has apparently wilted under pressure from the Prime Minister?s Office to be lenient. He has recently accorded conditional clearances to the steel project of South Korea?s Posco, Navi Mumbai airport and the Lavasa integrated township project of Hindustan Construction Company.
The decision on the Orissa UMPP means that the initial bidding process for the project could be restarted after the expiry of the deadline (March 31, 2011) for responding to the ‘request for qualification’ (RFQ). The fate of two other power projects ? one proposed by NTPC and the other by Orissa Power Generation Corporation (OPGC) ? continue to remain uncertain. Like the UMPP, captive coal blocks of these two projects also fall in the areas barred for mining (no-go areas) under the new categorisation finalised by the environment ministry. Incidentally, the size of proposed NTPC project would be equivalent to the UMPP at 4,000 mw. ?We have worked out a compromise formula. The clearance for the UMPP is on the condition that the power ministry will not ask us to clear any other project near the UMPP. The power ministry has to take a call on which project it wants cleared. We can’t open a Pandora’s Box by clearing these projects,? said an MoEF official. All three projects?UMPP, NTPC’s Darlippali project and power project of OPGC ? have been allocated captive coal blocks in close proximity with each other in areas that now fall under the no-go zone. MoEF fears that green nod to all projects could potentially damage the green belt surrounding the coal blocks, causing irreparable damage to the region’s flora and fauna.
? The conditional nod for Orissa UMPP has also been given at the request of the power ministry which argued that stopping competitive bidding process for the project would send a bad signal for investors who have started viewing the Indian power sector with interest,? said the official. Several power companies like Sterlite, Jindal Steel and Power, NTPC, Lanco and CLP have shown interest in projects based on domestically available coal. ? Even approving two out of the three projects is difficult and we are finding out ways of how to mine. We have already written to the power ministry about this,? the official added. Orissa Integrated Power (OIPL), a wholly-owned subsidiary of PFC (the nodal agency for UMPP projects) and the shell company for the Orissa project, had received allocation of the three coal blocks, of which Minakshi B and dipside of Minakshi fall in the prohibited region considered too green and termed ‘no-go’ area by the environment ministry to permit mining. Though the RFQ process for the project was started last June, lack of clarity over captive mines has led to four postponements so far, with last day for RFQ now extended till March-end.
Coal is crucial for the UMPP and the valuation of the project and bids will depend highly on availability of fuel source. For a power project of this size, the annual coal requirement capacity is around 15-16 million tonne. The conditional clearance by MoEF is expected with some more changes in the mining plan in captive blocks reserved for the UMPP. Last month, the two ministries had decided that the boundaries of the captive coal blocks attached with the UMPP will be redrawn to take thickly forested areas outside the mining zone. It is expected that this route may still be adopted without disrupting the output potential of the coal blocks. The area under the captive coal mine blocks has 250 hectares of forest land having medium- to high-density forests and the environment ministry earlier wanted to save at least 200 hectares of the forest land. UMPPs have a key role in executing the government’s ambitious power capacity addition programme. With each project generating 4,000 MW of electricity, it is expected to fast-track capacity addition.