The central government is set to decide on Wednesday the fate of the power project planned by Lanco Infratech Orissa, which has suffered inordinate delays due to lack of clearances as it falls in the forest area.
The prospects of the project, which has already achieved financial closure, are alive as it has the crucial coal linkages.
The final call on coal linkages would be today at the Meeting of the Standard Linkage Committee (long term) to “review status of existing coal linkages and Letter of Assurances for power sector,” where officials of Lanco has asked to attend to explain their position.
SLC meetings thrash out issues relating to providing coal by Coal India and other PSUs to the power sector and also settle inter-ministerial disputes.
The name of the 1320 mw (1X660 mw) Lanco Babandh Power Ltd planned at Babandh village at Dhenkanal, Orissa, is on the list of “cases where coal companies have been advised not to take coercive actions.”
“Notice for cancellation (issued). Ministry of Coal advised not to take any coercive action. SLC(LT) may take a view to cancel/withdraw,” the letter addressed to the power companies, including Lanco, said.
The major impediment for the project is that it falls within the Dhenkanal forest area.
Lanco wrote to the power ministry a year back that the project “is facing abnormal delay due to delay in getting various clearances” and requested scaling down the size of the project by half from 2,640 mw (2x1320 mw) to 1320 mw.
While Lanco managed to get a LoA from Coal India subsidiary Mahanadi Coalfields, delays forced the coal major to threaten with cancelling the pact, though the coal ministry intervened suggesting shifting of the project to a non-forest location.
“Action was initiated for forfeiture of Counter Guarantee and withdrawal of LoA due to non-achievement of some of the milestones. However, Ministry of Coal letter dated August 1, 2011, advised not to take any coercive action till location change and forest clearance issues are considered by SLC (LT),” Mahanadi Coalfields had said.
Phases 1 and 2 of 660 mw each were supposed to get commissioned in 2013-14 and 2014-15, respectively.
If SLC gives the green signal, Lanco can start work on the project as it has already achieved financial closure from a consortium of financial institutions led by ICICI Bank, which has granted debt of `5,544 crore, with the balance `1,386 crore coming from equity.