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Private power comapanies violating coal block norms

Even as the Central Bureau of Investigation (CBI) under the jurisdiction of Supreme Court (SC) investigates the multi-crore Coalgate scam, the union power ministry (MoP) has found out that many private power companies were violating the terms and conditions of coal block allocation.
 
These companies had been allocated coal blocks as they had submitted that they planned to set up power plants and sell power to distribution companies (discoms). MoP had directed them in June 2012 to participate in tenders floated by the discoms for long term power purchase.
 
However, MoP has discovered that some of these companies are not complying with this directive. MoP suspects that these companies have no intention of selling power to discoms but want to sell it to industries or at exchanges as it fetches higher rates.
 
The ministry has therefore issued a notification, warning such power companies that if they do not take certain steps their allocations would be cancelled.
 
The company whose mine is yet to start production should sign a long term power purchase agreement (PPA) with discoms at least six months before commissioning of the power plant for which the block was allocated. If this is not done the permission for mining will be cancelled.
 
The second case is where the company's plant has already been commissioned or is expected to be commissioned within 18 months and whose coal block has also started production or is likely to commence soon. Here the company will have to sign a long term PPA with discoms within next eighteen months else the allocation would be cancelled.
 
The MoP has asked the state governments where the coal mine of the companies concerned is located to incorporate this condition while signing the mining lease. In case of private power producers with whom mining agreements have already been signed, the state government should incorporate it in the lease as an addendum.
 
An MSEDCL official said that many state-run discoms were unable to pay bills on time and hence private companies were reluctant to enter into PPAs with them. "Last year Uttar Pradesh was unable to pay NTPC's bills and the latter sold its power to other states. Any power company would hardly agree to sell power to UP or states having similar financial problems," he pointed out.

Source: The Times of India