Government raps NTPC for delay in developing coal blocks

The central government has pulled up the state-owned power generator, NTPC, for delays in developing coal blocks allotted to it. The company's dallying in commencing production from these blocks has put at stake the country's captive coal production target, the government told NTPC at a recent meeting.

The national target is to achieve 51 million tonnes of captive coal production by 2012. NTPC has been allotted eight captive coal mines, with reserves of around five billion tonnes, by the coal ministry over the past six years. All these were expected to come into production between April 2008 and March 2012. However, not a single captive block has commenced production so far. In a review meeting with block holders recently, a committee of the ministry expressed concern. "Due to failure of NTPC to develop blocks in time, the production target of the ministry of coal is in jeopardy," the committee said, before deciding to issue a showcause notice.

When asked, NTPC denied the allegations of delay. "There has been no delay in development of coal blocks. According to the analysis by Bain & Company, international consultant, the benchmark for development of coal blocks internationally is up to seven years, whereas the same takes up to 17 years in India," the company said in a written reply to an e-mail questionnaire.

NTPC, however, agreed that its coal mining activities will commence only by March 2012, when the Pakri-Barwadih coal block in the North Karanpura coalfields in Bihar starts production. "Other blocks are expected (to take off) in 2013 because of uncertainty of coal evacuation link and forest and environment clearance," it said.

The ministry had last week decided to recommend taking back two blocks allotted jointly to NTPC and the country's largest miner, Coal India Ltd (CIL), as "the development in respect of the two blocks is almost negligible". Government-controlled CIL is going for an initial public offer on October 18 and the lapse in meeting production targets could impact its valuations.
 

NTPC’S COAL BLOCK DEVELOPMENT STATUS
Coal block	Date of allocation	Target date  of production	Status of progress
Pakri-Barwadih	Oct-04	Apr-08	Environmental (Env) clearance  granted, Forest Clearance (stage II) awaited
Chatti Bariatu	Jan-06	Jul-09	Env clearance granted, Forest Clearance awaited
Kerandari	Jan-06	Jul-09	Env clearance granted,  Forest Clearance awaited
Talaipalli	Jan-06	Mar-12	Env clearance and Forest  Clearance awaited
Dulanga	Jan-06	Sep-11	Env clearance and Forest  Clearance awaited
Brahman &  Chichiro Patsimal	Jan-06	Oct-11	JV company with CIL  incorporated in April 2010, exploration underway
Chatti Bariatu (South)	Jul-07	Jan-11	MoU with Mineral Exploration Corporation being finalised for exploration, application for land acquisition being submitted
Source: NTPC

NTPC has a coal-based power generation capacity in excess of 25,000 Mw - roughly 80 per cent of its total capacity and 30 per cent of India's overall coal-based power capacity. NTPC accounted for 28 per cent of the country's overall 770 billion units of power generation in 2009-10.

The company's stations require 150 mt annually and face a shortfall of roughly 10-12 mt. The company had entered into coal mining years before, as part of its "fuel security strategy", to ensure reliability and lower cost of coal supply.