The Rs 11,500 crore (Rs 115 billion) expansion plan of Vedanta Aluminium at Jharsuguda in Orissa may be delayed due to environmental issues.

The company put up its expansion proposal before the Industrial Promotion and Investment Corporation of Orissa Ltd two months ago. It proposed to increase the Jharsuguda smelter's capacity to 1.4 million tonnes per annum from the current 0.5 million tonnes.

However, the proposal is yet to be placed before the State Level Single Window Clearance Authority. Sources said the environmental 'carrying capacity' study being commissioned by the Orissa State Pollution Control Board in the Sambalpur-Jharsuguda belt and the state government's reported reluctance to provide more bauxite mines to VAL are delaying matters.

The proposed expansion was discussed when Vedanta chief, Anil Agarwal, called on Chief Minister Naveen Patnaik in the first week of January 2009.

The company has indicated that if timely approval is given, it would like to complete the expansion by the end of November 2010.

The aluminium rodding shop and the bake oven of the smelter project are expected to be completed by April and July 2010, respectively.

Sources said the process for the study on environmental carrying capacity of industries in Sambalpur-Jharsuguda has been set in motion by SPCB. It has invited technical offers from five IITs (Kanpur, Kharagpur, Mumbai, Delhi and Chennai), the Nagpur-based National Environment Engineering Research Institute and The Energy and Resources Institute from Delhi, for the study.

These institutes are to give their offer by the end of this month. The selected institute will take up the study within a 35-km radius around Rengali. The study is expected to consider the existing level of emissions, water and air pollution, and project future levels.

Based on the study, it will recommend how many industries, particularly in sectors like power, aluminium and steel, should come up in the area. Since the seasonal data for a year will be required, the study is likely to take more than a year.

Sources said the state government has asked SPCB to give a preliminary report on the carrying capacity in about three months, suggesting environmental mitigation measures to be taken by the new industries.

It will be incorporated in the memorandum of understanding to be signed between the state government and the companies and will facilitate the government in taking decisions on some important projects.

However, with the model poll code of conduct in force and the outcome of the carrying capacity study yet to be known, the investment plans of different companies in that area will be delayed, sources added.