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Home News Power Sector News Supreme Court order to derail Vedanta's plans to raise power capacity

Supreme Court order to derail Vedanta's plans to raise power capacity

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VedantaAnil Agarwal-owned Vedanta group's plans to become a formidable player in the power sector will suffer a major setback due to unavailability of coal after the Supreme Court judgement last week. The Supreme Court had cancelled coal blocks allocated to two group companies — Balco and Sterlite Energy — which will impact profitability of the companies.

The group operates power plants in Korba, Chhattisgarh, and Jharsuguda, Odisha. Balco's 1,200-Mw power plant in Korba has been dormant due to lack of approvals. Now with its coal mine gone, the power project will keep bleeding money, said analysts.

At Jharsuguda, Sesa Sterlite has two power plants — a 2,400-Mw power plant with independent power producer status and a 1,200-Mw captive power plant to feed the nearby aluminium smelter of 0.5 million tonnes per annum (mpta).

All these power plants were set up with hopes domestic coal can be used. But a shortage of the commodity forced the company to import from as far as South Africa. At Jharsuguda, Vedanta also faces transmission constraints, which have led to lower plant load factor, or output, and electricity shortage. Transmission is expected to improve in the second half of this year as capacities get commissioned, the company Chief Executive Officer Tom Albanese had said soon after its June quarter results.

Group insiders said the company will bid for coal blocks after the government comes out with new norms. Till then, it will use coal pooled from domestic and foreign sources to keep the cost of power down.

The company uses its captive unit to run its aluminum plants in Odisha and Chhattisgarh while the power generated at the independent plant is supplied to Odisha and other states.

Vedanta had wanted to become one of the biggest power producers in India. Agarwal had said in an interview the group will bid for power projects to become one of the biggest power producers in the country. But now he is facing a resource problem: His Odisha alumina refinery is also working at low capacity due to lack of local bauxite.

Agarwal had also announced in Bhubaneswar on September 22 that his Lanjigarh alumina refinery would raise production capacity from one million tonne per annum to two million tonnes within a year and gradually ramp it up to six million tonnes. Agarwal had invested Rs 10,000 crore in the Lanjigarh project. Besides, Vedanta has a 1.25-million-tonne smelter with SEZ (special economic zone) status, which is lying idle for the last three years pending resolution of certain issues with the state government over sourcing of power to run the unit.

Source- Business standard


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