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Jharkhand cancels MoUs with 22 firms

harkhand government has not renewed memorandum of understanding (MoUs) with 22 companies, including Birla, JSW Energy and Reliance Energy, because of their unsatisfactory progress in setting up thermal plants in the state.

State energy secretary Vimal Kirti Singh said that the government did not renew the MoUs as the companies did not make any progress in their projects. The combined capacity of the cancelled projects is more than 25,000 MW. Singh said that the state government has decided to take back the facilities given to the companies.

The combined capacity of the cancelled power projects is more than 25,000 MW.

Birla, JSW Energy and Reliance Energy had signed MoU with the state government for setting up power plants of 1,000 MW each in 2006. Other companies whose MoUs were cancelled include Rungta Mines Limited, KVK Neelachal Power and Core Steel and Power Limited.

Shortage of coal, delay in statutory clearances, land acquisition and law and order problems are the primary reasons why power companies are getting reluctant to go ahead with their projects.

Coal-rich Orissa, Chhattisgarh and Orissa are also facing similar problems. In Orissa, out of 29 MoUs signed for power projects, 22 projects have been found to be unsatisfactory. Similar is the case with Chhattisgarh.

Orissa energy minister Atanu Sabyasachi Nayak said that the companies which had signed MoUs with the state government are slowly getting disoriented mainly because of poor coal availability. "Out of the 29 MoUs in power sector, 22 projects got delayed even before the start of the project. In fact, last year we cancelled one MoU owing to poor progress. But we can understand that they are pulling out mainly because of coal shortage. Of course, there are issues like delay in getting land for the project as well."

The minister said that his government has urged the Centre to facilitate the process of allotment of coal blocks to the companies. "Otherwise, we will not be able to reap the benefits in terms of energy despite being a coal-rich state," he added.

Meanwhile, a senior government official said that in many cases the companies were not serious and had an eye on the natural resources. Besides, in some cases, they also failed to manage funds for their projects, which lead to the pullout, he added.

Chhattisgarh Chamber of Commerce and Industries president Srichand Sundarani said that though a few companies have been able to start their projects after signing MoUs with the state government, there are many who have started withdrawing. "There is a shortage of raw materials. As a result, companies which initially showed interest in setting up power plants are now getting reluctant," said Sundarani. He, however, said that the state government has been supportive of the power projects.

Vivek Pandit, director head energy department at Ficci, believes that besides coal shortage, cost factor is also forcing power companies to rethink their projects. "The power tariff is not very attractive. Therefore, they find prefer to default on the contract, rather than pursue the project and suffer losses," he said.

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