Odisha set to garner Rs 1 trn in 50 years from auction of 20 merchant mines

The lease validity of these iron and manganese ore blocks notified for auctions is expiring by March 31, 2020. Whilst five iron ore blocks are set aside for end user industries, the remaining 15 are earmarked for bidding by merchant miners. Steel players, sponge iron ore producers, pellet manufacturers and pig iron makers along with leading merchant miners are anticipated to bid aggressively for these blocks and place steep premiums to acquire these mines where production hopes to take off seamlessly.

Since a large number of iron ore blocks are concomitantly offered for auctions, the Odisha government has pegged the reserve price for bids on a higher side. And, higher floor price is expected to hike the cost of mine acquisition and bolster the state coffers.

“The floor price is fixed at 15 per cent for iron ore blocks with deposits of up to 10 million tonnes and 25 per cent for higher quantum of deposits. Higher reserve price will spur more revenue for the state government. Besides, all these mines are ready to operate with associated infrastructure for smooth movement of minerals. Amid all these congenial factors, both merchant mine producers and end users looking to grab mine for captive use are expected to pledge higher premiums. Our estimates suggest that over the 50 year lease period, Odisha could end up garnering Rs one trillion from these 20 blocks opened up for bids”, said a mining industry source.

Presently, Odisha has 17 operative merchant mines whose approved production capacity stands at 80 million tonnes. The leases whose tenure ceases by March 31, 2020 include the ones in the leasehold of major non-captive producers like Serajuddin, Essel Mining & Industries Ltd, KJS Ahluwalia and others.

Plans are afoot to extend the environment clearance of these mines by two more years to facilitate seamless transfer of ownership and unhindered production. Since forest clearance is co-terminus with the lease validity and cannot be extended as per existing statutes, an amendment is in the works on the Forest (Conservation) Act. The Union ministries of mines, law as well as environment, forest & climate change are holding mutual consultations in this connection.

In two phases, the state steel & mines department has issued Notice Inviting Tenders (NITs) to auction 20 blocks on October 4 and 14. After issue of NITs, the bids are set to be invited on November 18 and 28. Letters of Intent (LoIs) to the preferred bidders will be issued on January 3 and 15, 2020.

Storm-prone Odisha revives plan to build disaster resilient power infra

Wracked by a summer storm of immense ferocity, the Odisha government has revived the plan to develop disaster-resilient power infrastructure.

Fani, a very severe cyclonic storm with wind speeds gusting to 200 km per hour, barrelled in the state’s eastern coast near Puri on May 3. The state’s vulnerable power infrastructure was badly damaged by the cyclone, posing a great challenge to the state administration to rebuild the ravaged poles.

Known for its susceptibility to recurring cyclones, the Odisha government had, back in 2013, planned to install a disaster-immune power transmission network. The project was planned for areas in and around Gopalpur where Phailin, an extremely severe cyclonic storm made landfall in October 2013. Estimated to cost Rs 1,820 crore, the project was to be part-financed by the Asian Development Bank (ADB) with a contribution of Rs 615 crore. However, it failed to take off as the multilateral donor agency backed out after evincing initial interest in it. Meanwhile, the state energy department too lost interest in the ambitious project.

Of late, the plan, in limbo for about seven years, has gained currency after Fani’s strike. In the cyclone’s aftermath, Odisha’s power infrastructure has sustained damage of over Rs 8,000 crore, affecting over three million consumers. Realising the gravity of the damage, the state energy department is keen to broafd-base the power scheme. This time, the disaster proof power network will span the entire length of Odisha’s coastal strip.

“Officials of World Bank and ADB have done a recce of the areas affected by Fani cyclone. We have had incipient talks with their authorities for availing credit. The plan involves a complete replacement of all the traditional electric poles in the coastal zones,” said an official privy to the development.

Some estimates peg the cost of power system overhaul to exceed Rs 20,000 crore for a foolproof project. The state energy department, though, is looking to trim costs by abandoning the underground cabling network, which could cost six or seven times as much as normal conductors. A viable alternative is in the form of H-poles used by Railways. The other option is erecting T-poles resistant to squally winds and already in use in Gujarat and Kerala.

On its own, the energy department is implementing the State Capital Region Improvement in Power Supply (SCRIPS). The scheme, envisaged as one of the components of the disaster resilient power system, is taken up at a cost of Rs 1,500 crore to ensure uninterrupted power supply in Bhubaneswar and Cuttack.