Chhattisgarh UMPP likely to be scrapped with environment ministry’s decision to not allow mining in Hasdeo Arand coal field

The government is set to scrap the 4,000-mw ultra mega power project (UMPP) in Sarguja, Chhattisgarh with the environment ministry’s decision to not allow mining in the ecologically sensitive Hasdeo Arand coal fields.

The power and environment ministries have been at loggerheads over the latter’s refusal to give forestry clearance to the two captive coal blocks associated with the project. The captive blocks belong to Hasdeo Arand coal fields which have thick forest cover and rich wildlife habitat.

Sources in the government said that the Chhattisgarh state forest department has made up its mind to recommend scrapping of the project in its current form. The department’s view would be conveyed to the Centre before a formal announcement is made.

The forest advisory committee of the environment and forest ministry is also visiting Hasdeo-Arand coalfields on May15 to re-assess the ground conditions.

“We don’t see any headway in the project at least in the next one year because linakages need to be finalised. We will have to rethink from the angle of relocating the coal linkages because these need an in-principle environment clearance. Moreover, bidders can’t be invited till the linkages are defined,” said another official in the Chhatisgarh state forest department.It is expected that with the state forest department making up its mind not to pursue the UMPP in its current form, the process of identifying suitable coal linkage and alternate location for the R20,000 crore would start afresh. Already government has started talks to find alternate coal linkages from the neighboring Madhya Pradesh coal fields or the Mand-Raigarh coalfields for the UMPP. This, however, may need the existing project to be scrapped and a new project started at an alternate location.

Interestingly, the forest advisory committee of the ministry of environment and forests (MoEF) is visiting Hasdeo-Arand on May15 to see the ground conditions and the required area, among other details.

An official of the Power Finance Corporation (PFC), the nodal agency for UMPPs, expressed ignorance about the government’s plan to scrap the project but agreed that investor should not be foirced to live in uncertainty for prolonged periods. Another oficial of the power ministry said that parleys were still going on at the highest level to decide the fate of the project.

The initial bids (RFQ) for the Chhattisgarh UMPP began in March last year. However, ever since then the last date for submitting RFQ documents has been extended six times as Pindarakhi and Puta Parogia coal blocks that were allocated to the project by the coal ministry in 2009 fall in densely forested Hasdeo Arand coal belt.This belt has been declared a no go area for mining by environment ministry which on unrelenting mood over the coal field.

Environment minister Jairam Ramesh too has categorically stated that forest land can’t be diverted on the field as it is very rich in species diversity and an important wildlife habitat referring to an elephant corridor.

There are nine thermal power projects located in the no-go coal mining areas which are yet to get the clearance. Of these, two are located in Singaraulli in Madhya Pradesh, four in the Hasdeo Arand coalfield in Chattisgarh and three in the North Karanpura coalfields in Jharkhand.

So far government has bid out four UMPP at Mundra,Sasan,Tilaiya and Krishnapatnam.While Mundra UMPP has been bagged by Tata Power the remaining has gone to reliance Power. Intially the government decided to have nine UMPPs that have the potenatial to quickly add fresh capacity into the deficit power market in the country.