New Delhi: The Union government plans to call this month the next round of bids for the 4,000MW power plant at Tilaiya in Jharkhand, but a person familiar with the project claims it poses significant environmental problems that have been glossed over.

“Tilaiya project has no water. In order to provide water linkage, the dam’s height needs to be raised which in turn will submerge 20 villages," added this person who did not want to be identified, referring to the Tilaiya dam over the Barakar river. “Even the transport corridor for the project will pass through forest land. This issue is yet to be resolved."

Wrong track? A train with coal rakes. The transport corridor for the proposed project will cross forest land. Ramesh Pathania / Mint

“This amount is for increasing the height. Everyone knows it," the person added.

Eleven developers had qualified for the so-called request for proposals stage, or the second stage of bidding for the plant, one of the so-called ultra mega power projects launched by the Union government to accelerate the addition of power generating capacity in the country. Of the 11, nine companies have purchased the documents for the next stage of bidding: NTPC Ltd, Essar Power Ltd, Reliance Power Ltd, Tata Power Co. Ltd, Larsen and Toubro Ltd, Jindal Steel and Power Ltd , Sterlite Industries (India) Ltd, Lanco Infratech Ltd and Citra Thermal Power and Infrastructure Ltd. Lanco has bid along with Malaysia-based Genting Sanyen Power Sdn Bhd.

The Tilaiya project was to have been awarded by 23 June. This was deferred and the last date for the submission of second-stage bids was extended to 4 November. The government has said it will award the project by December.

A senior government official associated with the Tilaiya project said there was no problem with water supply. And information on the website of Power Finance Corp. Ltd (PFCL), the state-owned firm responsible for all ultra mega power projects, says: “The site has been examined for environmental aspects and found to be compatible with various eco-sensitive landmarks."

On 16 November, Mint reported that PFCL was looking to defer the second round of bidding after some of the companies had evinced fears about their ability to raise money in an uncertain market. The Tilaiya plant has already faced hurdles related to the law and order situation in Jharkhand—a state where there is significant Naxalite activity—and land acquisition which could lead to the displacement of tribals.

These issues are largely to blame for the delay, said Anish De, chief executive at Mercados Asia, an energy consulting firm.

The United Progressive Alliance government planned to set up 10 ultra mega power projects across the country. So far, three have been awarded— Mundra project to Tata Power and Sasan and Krishnapatnam projects to Reliance Power.