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OCPL to invest Rs 1500 cr on coal blocks development

Business Standard:  April 21, 2016

Bhubaneshwar: Odisha Coal & Power Ltd (OCPL), a 51:49 joint venture (JV) between two state run entities -- Odisha Power Generation Corporation (OPGC) and Odisha Hydro Power Corporation (OHPC) would invest Rs 1,500 crore on development of the Manoharpur and dip side of Manoharpur coal blocks.

Both the coal blocks have been allocated to OPGC under PSU dispensation route to cater to its 1320 (2x660) Mw expansion at Ib valley. OPGC, a 51:49 JV between the state government and US-based energy major AES, currently runs 420 Mw (2x210) power station at this location.

"Of the Rs 1,500 crore needed to develop the coal blocks, Rs 1,100 crore would be the loan component to be raised from a consortium of lenders comprising Power Finance Corporation (PFC) and Rural Electrification Corporation (REC). The balance Rs 400 crore would accrue from the promoters", said a senior government official.

Annual coal production capacity of the Manoharpur and dip side of Manoharpur coal blocks is pegged at eight million tonne. Total reserve of the two coal blocks is 531 million tonne.

"Coal production from the Manoharpur and dip side Manoharpur blocks would start from April 2019. OPGC would also add two more units of 1,320 Mw after the completion of the existing expansion plan. This will ensure energy security for the state", said Rajesh Verma, principal secretary (energy) and chairman, OPGC.

OPGC and OHPC on Thursday inked the shareholders' agreement for formation of OCPL, the JV company. OCPL was incorporated in January 2015. Initially, the JV company would have a paid-up capital of Rs 50 lakh.

"OCPL will progress in leaps and bounds and will surely commence production at the coal blocks before the schedule date. All the necessary statutory approvals and clearances for development of the coal blocks have been obtained and land acquisition for the mining lease area has progressed", said Pranab Prakash Das, minister for energy and electronics & IT.

OPGC is investing Rs 11,547 crore on expansion which also includes cost of other components like coal block development and dedicated rail corridor.

The state owned generator has already started construction work on its expansion.To fund the expansion, OPGC has already tied up funding of Rs 8,660 crore from PFC and REC by executing a loan agreement with the two Central PSUs.

The balance funding is to be borne proportionately by the Odisha government and AES, which hold 51 per cent and 49 per cent stake respectively in OPGC.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.