NALCO's capital cost to shoot up by Rs 1,000 cr

New Delhi, Jan 26.: Aluminium giant NALCO's capital outlay for its second phase expansion is all set to shoot up by nearly Rs 1,000 crore owing to a Governmental delay in approving its expansion plans.

"It has been assessed that the project cost of Rs 4091.51 crores is likely to increase to Rs 5048 crores. The increase in the capital outlay has arisen mostly on account of cost escalation...due to delay in Government approval," a top NALCO official told PTI.

Initially NALCO had envisaged to spend Rs 3623 crores for its second phase expansion plan during the 10th Plan, which will now spill over into 11th Plan owing to cost escalation following delay in Government approval, he said.

The PSU has planned a total outlay of Rs 9453.66 crores in the 11th Plan for implementing various projects, which include 4.6 lakh TPY smelter, building port for alumina export and caustic soda import and capacity expansion of the alumina plant to 2.1 MMTPY besides mining 6.3 MMTPY bauxite, he said.

Of the total money outlaid for the second phase, Rs 72.27 crore would be spent on developing mines, Rs 1,258 crore on processing alumina, Rs 1,609 on upgrading smelter capacity and Rs 1,151 on ancillary works, the official said.

The PSU has begun efforts to extract coal from Utkal-E Block located at Chendipada in Orissa's Angul district, which has mineable reserves of 68.67 million tonnes. It hopes to begin coal production from May next year.

"Considering that mining operation will be done by NALCO itself, the capital cost for this project has been estimated at Rs 307 crores. The financing of this project is expected to be done from internal resources," he said.

The cost of coal extracted from the mine would be more or less same as that being procured from Mahanadi Coalfields Limited (MCL). The company has fixed an outlay of about Rs 297 crores for mining activities during the 11th Plan.

Besides, NALCO has decided to spend Rs 400 crores to augment the capacity of the fourth stream to 7 lakh tonnes per year during 11th Plan, for which detailed feasibility report is to be finalised.

"The production of alumina from this project is likely to commence in 2010-11," the official said.

The company has also set an outlay of Rs 705 crore as additional capital expenditure for additions, modifications and replacements of its Orissa plant which was commissioned in 1985-86, he added.

The public sector behemoth has also outlaid Rs 255.98 crores for mining bauxite from the Panchpalli mines during 11th and 12th Plans.

Moreover, the company is exploring the possibility of setting up a smelter either in Oman or UAE, for which it has lined up an initial Rs 3,450 crores.

However, in the absence of assured gas supply, fruitfulness of the project appears to be difficult in the near future, he said.