Govt takes away one coal block from R-Power's Sasan project

Move comes a week after the firm pulled out of Tilaiya UMPP

The ministry of coal has withdrawn one of the three coal blocks allotted to the Sasan ultra mega power project (UMPP), run by Reliance Power, in Madhya Pradesh. The move comes a week after the company pulled out of the Tilaiya UMPP in Jharkhand, citing policy delay and land acquisition issues.

The gazette notification issued by the government said, “The government has reconsidered the issue keeping in view the judgment dated 24.8.2014 and order dated 25.9.2014 of the Supreme Court passed in W.P. (Crl.) No. 120 of 2012 and other connected matters and has decided to de-allocate Chhatrasal coal block and thus hereby withdraws/cancels the allocation letter No. 13016/04/2006-CA-I dated October 26, 2006 allocating Chhatrasal coal block in favour of Sasan Power Limited.”

The government cited the Supreme Court judgment dated September 25, wherein the court observed in some cases the government has allowed diversion of coal from UMPP to other end-uses.

Chhatrasal, Moher and Moher Amrohi coal blocks were awarded along with UMPP to Reliance Power through competitive bidding and decided to sell power at Rs 1.19 per unit. The plant achieved its full capacity last month. Government officials said the three mines supplied coal more than the demand of the plant.

Responding to a query, Reliance Power said, “We are studying the implications of the notification.” However, sources close to the development said the judgment does not categorically mention cancellation of coal blocks. “Since allocation for UMPPs is in accord with the opinion given in Natural Resources Allocation reference 20 and the benefit of the coal block is passed on to the public, the said allocations may not be cancelled.

However, it was submitted that in some cases, the government has allowed diversion of coal from UMPP to other end-uses ie. for commercial exploitation. Having regard to this, it is directed that the coal blocks allocated for UMPP would only be used for UMPP and no diversion of coal for commercial exploitation would be permitted,” said the executive. In the August 24 judgment, the apex court deallocated 214 coal blocks allotted over past two decades but UMPPs were exempted.