Chhattisgarh UMPP bids may run into environment ministry hurdles

BIDDERS for the ultra mega power project at Chhattisgarh, that are set to put in their pre-qualification bids by May 3, could be in for a major jolt as coal blocks linked to the 4000 mw project is unlikely to get the nod from the environment ministry. In a clear case of where one arm of the government works at cross purposes against the other, the power ministry has called for bids even as the environment and coal ministries have jointly declared the Hasdeo Arand coal belt region as a “no go” area for mining.

The environment ministry, which has been carrying out special audits on the encroachments and violations in the forest areas, has come down heavily over some ambitious mining projects like that of the Vedanta group in Orissa and also rejected a highway project in Madhya Pradesh that transgresses through Pench Tiger reserve.

The ministry has carried out a joint exercise with the coal ministry studying nine major coal mining areas and has concluded that almost 35% of the area under study (primarily in central and eastern India) is not viable for mining activities.

The decision of the environment ministry is likely to raise a crucial question over the fate of this proposed UMPP. For one, coal, the fuel for the power plant will now have to be carted from some other mine which would impact the costing and power tariffs. Also, bidders for this proposed power project may not be so keen on investing unless there is clarity on the fuel linkage. Power companies, like NTPC, Jindal Power, L&T, Sterlite, were keen on taking part in the Chhattisgarh power project that would involve an investment of almost Rs 20,000 crore.

“The environment ministry has studied the nine major coal belts in India. And we have divided the areas into three broad categories. The first being those which do not pose serious environmental risks, the second being a “no-go” but which would allow remedial measures like compensation foresting and the third category identifies areas that are completely no-go,” environment minister Jairam Ramesh told. “The Hasdeo area is one such no-go area where no mining activities will be allowed,” he said. The matter and decision was flagged by the environment ministry to the power ministry and a joint meeting was taken by officials of the prime ministers office (PMO) and representatives of coal, environment and power ministry in January, a copy of the agenda note that ET has in possession shows.

Apart from the UMPP, the decision will immediately impact about 30 mining licence given to steel, power and cement companies such as Prakash Industries, Hindustan Zinc, Ultratech and Chhattisgarh Captive Coal Mining. The captive blocks in this field have been allocated between 2003 and 2007 and substantive work on some of the blocks has already been done.

Officials in coal ministry,said that any new policy would also have to look at country’s needs of pushing up GDP growth that would mean that energy production will have to be enhanced rapidly.Coal India chairman Partha S Bhattacharyya expressed concern that new policy will seriously impact its operations. “The country needs a more integrated approach towards environment and forest clearance,” he said.