Coal news and updates

The proposed central ordinance to take over 75 of the 210 coal blocks, whose allocation were deemed illegal by Supreme Court, and an assurance from the Narendra Modi government that state utilities do not have to take part in the open bidding process should have come as a breather for West Bengal Power Development Corporation (WBPDCL), Durgapur Projects Ltd (DPL) and Damodar Valley Corporation (DVC).

 

But executives at these utilities are not too enthused by the proposal as they do not have the capability to mine the coal blocks themselves as the new law proposed requires them to do. The ordinance will be sent to President Pranab Mukherjee for final approval.

 

Reacting to the press conference by finance minister Arun Jaitley and coal minister Piyush Goyal that the Centre would take over the 75 coal mines that were allocated to central and state utilities within three to four months to prevent a power generation crisis due to the apex court decision, a WBPDCL source said that while the announcement was welcome, it did would not solve the problem.

 

"WBPDCL gets the coal mined by Bengal-Emta, a company whose core competence is mining. We don't have the competence to mine on our own. And it isn't just about the mining process but the way the mafia controls the economy in the coal belt," he remarked.

 

WBPDCL, DPL and DVC lost their captive blocks following the apex court ruling that cancelled the earlier allocations. While the government reasoned that central and state units would not be able to compete with local bigwigs like Reliance, Adani, Tata Power and Essen Mining as well as global giants like Glencore Xtrata, BHP Billiton, Rio Tinto, Vale, China Shenhua Energy and Thies in open bidding for the mines, state units are not sure whether they will be able to extract coal without commissioning the job to another player.

 

While state utilities are at least assured of retaining the coal blocks following the ordinance, private utilities like CESC and Trans Damodar are unsure what is in store for them as the Centre has refused the right of first refusal to match the highest bidder and stake a claim on the mine that had earlier been allocated to the company.

 

CESC, that gets 50% of its coal requirement from the captive coal block in Sarisathali near Asansol, has no option but to go in for open bidding. CESC chairman Sanjeev Goenka and MD Aniruddha Bose have already said the company will bid for the coal block. But with no assurance of it retaining the mine, CESC officials said its generation would suffer if it did not get the coal block.

 

"Every coal company whose coal block was de-allocated will suffer unless they are able to win it in the open bidding process. Like everyone, CESC's fate hangs in balance. Operating a power unit by purchasing coal from the open market will lead to a huge escalation in generation cost. That will mean a quantum jump in electricity cost," a source warned.

 

Coal blocks of state has over 30 years coal reserve. The blocks which are related to state are Barojora (WBPDCL), Tara East (WBPDCL and DPL), Tara West (WBPDCL), Sarisathali (CESC), Borjora North (DVC), Trans Damodar (WMMTDCL), Ardhagram (Shova Ispat and Joy Balajee), Gangaramchak and Bhadulia (WBPDCL), Pachwara North (WBPDCL) and Khagra Joydev (DVC).

 

 

Source: ToI