Mahanadi Coalfields plans Rs 9,000-cr power project

Mahanadi Coalfields Ltd (MCL), an arm of Coal India Ltd (CIL), plans to set up a 1,600-Mw power plant in Orissa with an investment of Rs 9,000 crore.The pithead plant would be fed by the company’s stranded coal asset near the Ib valley in Jharsuguda, Vasundhara, said a person close to the development. MCL will develop the coal block on its own.MCL will rope in a partner to pick up as much as 74 per cent in the special purpose vehicle it plans to form for the project. The coal producer will own the remaining stake. It recently called a pre-bid conference for the project. Sources said 40 companies attended the conference. “It seems like a good project because the coal supply is assured and the equity contribution is lower,” said a firm which attended the meet. MCL would pump Rs 700 crore into the project, while the rest would be invested by the partner who wins the bid.

Along with equity contribution, MCL also plans to buy 25 per cent of the 1,600 Mw power to be produced, 400 Mw, for its personal consumption. However, the project is on the drawing boards since the company is yet to got permission from the government to use coal from the Vasundhara block, as well the land.

The first source said MCL needed the government’s approval to use the land as it would be for a different purpose. “Acquiring new land in Orissa is a tough proposition. Unless land is provided by the company, it will become a very tough project to execute,” he said. The bids for the project will be sought after these issues are settled by the company.MCL would take care of other requirements like water supply and environmental clearances. Power Finance Corporation is advising MCL on the project.