Coalgate verdict: Relief for NTPC, Reliance Power and SAIL

Supreme Court cancelled all blocks except government run non-joint venture operating blocks

The The Supreme Court’s decision to cancel the allocation of all captive coal blocks during 1993-2010 other than those to government-owned companies (and not operated on a joint-venture basis), has brought relief to NTPC and SAIL. Besides, two blocks allotted to the Sasan ultra mega power projects (UMPP) owned and operated by Reliance Power have also been exempted from cancellation.

The Pakri Bardiwh coal block in Hazaribagh, Jharkhand, allotted to NTPC and with capacity of 15 million tonnes (mt) a year, is set to start production by next year. The Tasra coal block allotted to SAIL has already begun production, according to an affidavit filed by the company to the government. The block, in Dhanbad district of Jharkhand, is likely to produce four mt of coal a year.

Blocks allocated to companies such as Karnataka Power, Madhya Pradesh State Mining Development Corporation, West Bengal Power Development Corporation, West Bengal State Electricity Board and Punjab State Electricity Board stand to lose, as these firms operate the blocks through joint ventures with private mining companies.

In its judgment on August 25, the Supreme Court had declared all blocks allocated between 1993 and 2010 illegal, except those allocated to UMPPs. “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,” the court had said.

The Sasan UMPP, a pit-head power project, was allocated three captive coal blocks in Madhya Pradesh, out of which two have been let off the noose — Moher and Moher Amlohri extension. The cumulative coal production from the three is 25 mt a year and the coal produced will be used to fire the 4,000-Mw UMPP. Four of the six 660-Mw units of the Sasan UMPP are operational.

The Supreme Court has, however, ruled the coal blocks allocated for UMPPs will only be for captive use; no diversion for commercial exploitation will be allowed

The verdict in a nutshell:

* Supreme Court cancels all blocks except government run non-joint venture operating blocks

* Only NTPC and SAIL fit the criteria

Other government owned companies which lost out:

* Karnataka Power limited

* MPSMDC

* CESC

* WBPDCL

* WBSEB

* Punjab State Electricity Board

As per its last judgement, coal block allocations to UMPP stand legal

Anil Ambani Promoted Reliance Power’s Sasan and Tilaiya UMPP are the two out of four UMPPs with captive mines