It is steeped in complexities of policy, administrative and legal tangles

Here is the tale of a 20-year-old power sector project which, if implemented, would not only have provided a major relief to the power-starved Tamil Nadu but also helped transform one of the industrially and economically backward regions of the State.

But, the project – Jayamkondam integrated lignite mining and power generation – is steeped in complexities of policy, administrative and legal tangles.

A recent public statement by the Neyveli Lignite Corporation (NLC) has confirmed the position.

Conceived over 20 years ago, the project is to come up in Jayamkondam of Ariyalur district in the central region of the State. Rich in lignite reserves, the area is also known for oil and gas reserves.

Even though lignite is generally considered to be less efficient compared to coal, the calorific value of Jayamkondam lignite is around 2,700 Kcal/kg whereas the value of Indian coal is in the range of 2,700 to 4,400 Kcal/kg.

During the first Jayalalithaa regime (1991-1996), the nod was given for an integrated project of lignite mining and power generation. A Memorandum of Understanding (MOU) was signed by the erstwhile Tamil Nadu Electricity Board (TNEB) and the Jayamkondam Lignite Power Corporation (JLPC), a special purpose vehicle, in August 1993, to take up the 1500-megawatt project. The Tamil Nadu Industrial Development Corporation (TIDCO), an enterprise of the State government, was one of equity partners of the JLPC. By the time preliminary work was completed, there was a regime change.

The successor Dravida Munnetra Kazhagam government, led by M. Karunanidhi, scrapped the project and directed TIDCO in 1997 to execute it through global bids. A consortium led by Reliance Industries was chosen. Even as land acquisition was under way, the consortium developed second thoughts about the viability of the project and it quietly withdrew from the scene. In three years, about 3,400 hectares were acquired by the revenue authorities. TIDCO and NLC officials say even after acquisition, original land owners have not been evicted.

According to TIDCO, the acquired lands have not yet been given to the NLC, which is not ready to accept liabilities. An official spokesperson of the NLC says his organisation’s decision is based on the assessment that capital cost of the project would go up steeply otherwise. A study in 2000 put the unit cost of electricity at Rs. 3.22 per unit.

A senior policy maker recalls that 12 or 13 years ago, no one told the government that the project was in need of more lands. Predictably, land acquisition became one of the major bottlenecks for the project.

In Ms. Jayalalithaa’s second spell (2001-2006), yet another round of efforts was made to get the project launched. The government held negotiations with the NLC.

In March 2005, it announced that the project was to be implemented as a joint venture, involving the NLC and the TNEB. A few months later, the NLC told the State government that it would like to carry out the project on its own.

In July 2006, the government, headed by Mr Karunanidhi, issued an order accepting the NLC’s proposal, which was to have a lignite mine of 13.5 million tonnes per annum and two units of 800 MW each at a total cost of Rs. 18,184 crore.

When it looked that the project was about to take off and then Electricity Minister Arcot N. Veeraswami even told the Assembly in April 2007 that foundation stone laying function would take place in January 2008, the NLC came up with a request for additional lands – nearly 8,980 hectares. This involved acquisition of most parts of the Jayamkondam town.

As the land acquisition continued, litigation too followed.

Two sub-courts were inaugurated in February 2008 for settling disputes over compensation and other issues.

The NLC had carried out preparatory works including geological exploration, soil investigation and contour survey.

Then came the policy stipulation from the Centre in April 2010 that all procurement of power should be only through competitive bidding route, which has, for practical purposes, killed projects such as Jayamkondam. Subsequently, the Corporation’s Board of Directors decided to keep the project in abeyance.

Broadly, two issues – desirability of the project in view of the scale and nature of land acquisition and exemption from the purview of the 2010 policy prescription – have to be thrashed out.

A senior policymaker adds that a fresh study has to be made whether the project can be revived, given the amount of land acquired. It should be possible to ensure the revival, considering technological developments in the last 10 years, he adds.