Nava Bharat-Essar deal under Odisha law dept's scrutiny

Source : BUSINESS_STANDARD
By : Jayajit Dash
Last Updated: Wed, Nov 14, 2012 21:21 hrs

Nava Bharat Power, whose stake sale to Essar Power has snowballed into a controversy after the surfacing of the coal block allocation row, is now facing scrutiny from the Odisha law department.

The law department is vetting the deal to check if it was in the ambit of the law even as Essar Power has filed a fresh application to take possession of land for the power project earlier proposed by Nava Bharat.

The promoters of Nava Bharat Power had sold 100 per cent shares of the company to Essar Power in two tranches soon after being allocated coal blocks. The matter is now being investigated by the Central Bureau of Investigation (CBI). Nava Bharat Power reportedly made a profit of Rs 200 crore from the deal. The state government has also started vetting of the memorandum of understanding (MoU) signed with Nava Bharat Power after questions were raised regarding the sanctity of the pact signed with the power producer.

The time period of the MoU, signed by Nava Bharat to set up a 2,250 Mw power plant in the state, however, has lapsed since June 2009 and not been renewed.

Nava Bharat Power had won the Rampia and Rampia Dip side coal blocks jointly with five other companies in 2008 for its power plant, proposed at Meramundali near Angul. The Opposition had questioned the state government's basis for recommending the coal block in favour of Nava Bharat Power in 2007.

Recently, the state energy department had sought a detailed response from Nava Bharat Power regarding the status of its MoU and proposed power project.

“No land has been acquired yet for Nava Bharat Power. Even 6 (1) notification issued earlier under the Land Acquisition Act is no longer valid as the MoU signed with the company (Nava Bharat) has expired. The land procurement process has to begin anew for the project,” a highly-placed official source had previously told Business Standard.

An Essar Power source said that while they had not taken any decision to shelve the project, the company was going slow on project execution.

The proposed 2,250-Mw coal-fired plant at Meramundali requires 1,200 acres and 5,057 million tonnes of coal every year. In the original MoU, Nava Bharat had committed to start the first unit of the project comprising 525 Mw output by January 2014.

Essar Power had earlier said it had invested over Rs 500 crore on the power project in addition to the acquisition cost of Rs 230 crore.“Essar Power has invested more than Rs 500 crore in developing the project and has also achieved financial closure, with ICICI Bank having underwritten debt financing of more than Rs 3,720 crore,” the Ruias-controlled firm said in a statement on September 5, when the CBI filed an FIR against Nava Bharat.




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