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Maoist fighters' death threats stop work on $2bn electricity project

Death threats from Maoist guerillas have halted work at a US$2 billion electricity project in Jharkhand state.

NEW DELHI // Death threats from Maoist guerillas have halted work at a US$2 billion electricity project in Jharkhand state.

Jindal Steel and Power, which is building two electricity plants in the state, stopped all work following the threats from the guerrillas who are against the development of an adjoining coal mine.

"Our people are mortally scared to go into the area," Ravi Uppal, Jindal's managing director, said yesterday. "We have asked the government for security. We will not move ahead unless our safety is guaranteed."

Halting the projects jeopardises the company's plan to increase generation capacity more than tenfold in seven years, and underscores the risk the Maoists pose to industry.

The rebels are adding to challenges Manmohan Singh, the prime minister, faces as he tackles the slowest pace of economic growth in a decade, the rupee's plunge to a record and an unprecedented current-account deficit.

The rebels, who have waged a war against the government from dense forests, draw support from villagers who believe they have a natural right to the mineral resources beneath their habitat.

Mr Singh has called Maoists the greatest threat to India. In May, about 300 armed rebels killed 27 people including senior leaders of Mr Singh's ruling Congress Party.

The Maoists' campaign is threatening to derail Mr Singh's push to boost power generation in a nation where outages lower factory output and deprive more than half its population of education and health care. Average peak power supply lagged demand by 6 per cent in the four months to July 31, according to data from the federal power ministry.

Last month, the Maoists killed five policemen in Jharkhand, including the chief of the police in the district where Jindal is building one of the coal-fired plants. The two plants were planned to have a combined capacity of 2,640 megawatts.

The Maoist death threats come amid probes by India's top investigating body into allocations of coal mines to Jindal and its rivals. Jindal is among the biggest beneficiaries of a policy that gave away coal mines without auctions, a plan that may have cost the government 1.86 trillion rupees (Dh107.34 billion), according to a report by the state auditor last year.

"These controversies have distracted us, they have set us back," Mr Uppal said. "We've been dragged into this while we were trying to put all our energy into the projects."

The Central Bureau of Investigations raided Jindal's offices and the New Delhi residence of the chairman, Naveen Jindal, on June 11. It will question Mr Jindal after the monsoon session of parliament ends on August 30.