Orissa may scrap deal with Essar Power

In what may signal the beginning of the end for the frivolous Independent Power Producers (IPPs), the Orissa government is mulling to scrap the deal with Essar Power for the inordinate delay in project execution and the lack of initiative by the company to push ahead its Orissa project.Essar Power, which had proposed to set up a 1000 MW power plant at Paranga near Angul, has not acquired even a single acre of land despite entering into a MoU (Memorandum of Understanding) with the state government in September 2006.The MoU signed by Essar Power with the state government had expired and the company had not applied for renewal.

“The tardy progress made by Essar Power has frustrated the state government. The company has not shown any initiative in project execution and this is reflected in the fact that the company has neither set up any office in the state nor deployed manpower for proceeding on the project.For the state government, the Essar Power project is almost a closed chapter and a formal communication would be sent very soon to the company, indicating the government's intent”, said a source familiar with the development.

Essar Power needed 1070 acres of land out of which 770 acres are private land while the remaining 300 acres are government land. It may be noted Essar Power along with Visa Power and Nav Bharat Power Limited was one of the three power producers who were pulled up by the state government last month for their sluggish progress.The state energy department had reviewed the status of 21 out of 27 IPPs that had inked MOUs with the state government. All the 27 IPPs have a cumulative generation capacity of 32,420 MW.

Even though these three companies had inked MoUs (Memorandum of Understanding) with the state government in 2006, the pace of land acquisition for these projects has been extremely slow which had invited the wrath of the state government.The financial closure of the projects is also pending due to the delay in acquisition of land and non-allotment of coal blocks.