NTPC uncertain on fate of 5 coal blocks

The fate of NTPC’s five coal blocks allocated between 1993 and 2010 hangs in the balance.

The Supreme Court on September 24 ordered de-allocation of blocks, except those given to ultra mega power projects and Central Government public sector units where there are no joint ventures. In question are 218 coal blocks, of which 12 were with ultra mega power projects and 10 belonged to NTPC.

Confusion arose with the Court specifically saving four blocks, including NTPC’s Pakri Barwadih. NTPC had 10 coal blocks, of which one that was not de-allocated is set to commence operations soon.

The company had got four blocks recently, while six were awarded earlier. Of the six, one was exempted from de-allocation by the apex court.

While NTPC has decided to wait for clarity from the Coal Ministry, the Ministry, in turn, plans to seek legal opinion on the matter.

Sources in the know told BusinessLine that the company has spent close to ₹2,000 crore on the six blocks. The five blocks that face an uncertain future are at advanced stages of development as far as land acquisitions and mandatory regulatory approvals are concerned, another official said.

The Coal Ministry has also decided to look into how the miners that were allocated coal blocks for captive use are handling the surplus. The case in point is Anil Ambani’s ultra mega power project in Sasan.

“We need clarity on how the verdict is to be implemented and for that we are seeking legal opinion. The good thing is there is time till March 31, 2015 to work out and clarify all issues,” said a senior Coal Ministry official.

The Supreme Court in its recent order had referred to its August 25 observations, where it had exempted 12 coal blocks allocated to ultra mega power projects. This exemption was given because the Court felt that a transparent tariff-based bidding system had been followed in these allocations. However, this exemption came with a caveat that coal from such blocks can only be used for captive purposes of feeding the power plant.

The Coal Ministry is also in the process of working out a mechanism for fresh allocation of blocks, which would need to be done after March 31, 2015 to ensure continued fuel supply.

The Ministry has been maintaining that there has been no supply disruption as of now. According to data available with the Ministry, Coal India Ltd and Singareni Collieries Company Ltd have produced 154.79 million tonnes of coal between April and July 2014, which is around 94 per cent of the target production. The total coal dispatches to the power sector between April and July 2014 were 127.96 million tonnes — 2.1 per cent higher than the dispatches last year.