NTPC loses 3 coal blocks, says deallocation not transparent

The government has cancelled five coal blocks allocated to power companies, including three to National Thermal Power Corporation (NTPC), due to their failure to develop them, within days of Coal Minister Sriprakash Jaiswal's remarks that the decision to cancel the fields allocated to the PSU will be reviewed.

NTPC's three coal blocks -- Chhati Bariatu (South), Chatti Bariatu and Kerandari -- have been cancelled. They have an estimated production capacity of 26 million tonne per annum and total reserves of 836 million tonne.

"The Coal Ministry is of the view that allocatee company is not serious about development of the coal block[s] and has, therefore, decided to deallocate.....Coal block[s], allocated to NTPC," a letter addressed to the chairman and managing director of NTPC said.

Reacting to the development, an NTPC official said there was no delay on the part of the company in developing these three blocks and the deallocation process lacked transparency.

"NTPC is committed for timely development of these blocks and has put all-out efforts for early development of these coal blocks.....The whole process/decision of deallocation is not at all transparent and needs a holistic and rational review," the company official said.

Expressing shock, the official said that although the power major had achieved so many activities in the coal blocks (Chatti-Bariatu and Kerandari), it was surprising that they were being deallocated.

"If compared with the contemporary coal blocks, NTPC is far ahead from the others. Even, the blocks, adjoining to these coal blocks in North Karanpura coalfield, are much behind than NTPC's blocks and still, they are not in the deallocation list," the official added.

Chatti Bariatu and Kerandari coal blocks in North Karanpura coalfields in Jharkhand were allocated to the public sector company NTPC in 2006 for captive use in their own specified-end use projects. While Chatti Bariatu (South) coal block in Jharkand was given to it in 2007.

The deallocation of the coal blocks, according to the company's officials, is also likely to hit the company's projects.

"It may impact earmarked power projects such as Barh-II (1,320 Mw) and Tanda Expansion [1,320 Mw] Power Projects of NTPC," the officials said.

Chatti-Bariatu and Kerandari blocks are slated to begin their production in March and September, 2013, while in the case of Chatti-Bariatu (South) is 2037.

The other two blocks which were cancelled include Saharpur Jamarpani coal block in Jharkhand of Damodar Valley Corporation and Banhardih coal block of Jharkhand State Electricity Board.

Earlier, Jaiswal had said that his ministry may review its decision of cancellation of coal blocks allocated to NTPC, provided the reasons put forward by the power major for its failure to develop the blocks were genuine.

Minister's reaction soon came after the Power Ministry wrote a letter to the Coal Ministry earlier this month, asking for an urgent review of its decision of cancellation of coal blocks allocated to NTPC.

In the letter, the Power Ministry had also expressed concerns that NTPC's plans of adding over 15,000 Mw generation capacity were likely to get hit due to deallocation of the blocks.

To weed out non-serious players, the government, last year, issued notices to 84 coal and four lignite block allocatees for not developing the areas within stipulated time and sought explanation as to why blocks should not be cancelled.