Coal ministry to cancel 5 NTPC blocks

In a major setback to India’s largest power generator and Maharatna NTPC Ltd, the Union government on Thursday announced it would cancel allocations of five of the eight blocks awarded to the company over the past seven years.

The five blocks — Chatti Bariatu, Chatti Bariatu (South), Kerandari, Brahmani and Chichiro Patsimal — have combined geological reserves of 3 billion tonnes. The news saw the company’s share price coming down 2.8 per cent at the Bombay Stock Exchange (BSE) to close at Rs 173.5 on Thursday.

The decision, which is based on the recommendations of a review committee headed by the special secretary in the ministry of coal, Alok Perti, could hurt NTPC’s long-term fuel securing plans, experts believe. The power producer currently requires around 150 million tonnes of coal to operate 36,000 Mw capacity annually.

The company plans to meet around 20 per cent of its coal requirement of 250 MT in 2017 through captive production.

The coal ministry had last year initiated a massive review of the development status of 203 captive coal blocks allotted to companies since 2003 as only 23 of these blocks have been able to commence production so far. The ministry had later issued showcause notices to 84 captive coal block holders, including the world’s largest steel maker ArcelorMittal, Tata Steel, Jindal Steel and Power (JSPL) and NTPC Ltd.

The eight coal mines allotted to NTPC so far by the coal ministry possess reserves of around 5 billion tonnes (bt). All these were expected to come into production between April 2008 and March 2012. However, not a single block has commenced production so far even while the power generator has set for itself a target of ramping up coal production from its captive mines to 47 MTPA by 2017.

Of the five blocks facing deallocation, two — Brahmani and Chichiro Patsimal — were to be developed by a 50:50 joint venture between NTPC and the state-owned coal producer Coal India Ltd. Coal for the two blocks in Orissa was to be used for Kahalgaon and Farakka expansion projects of NTPC. The two blocks with total geological reserves exceeding 2 billion tonnes are to commence production from October 2011, as per the original plan.

Chatti Bariatu and Chatti Bariatu (S) have reserves of around 552 mt and Kerandari has reserves of 285 mt. The company, when contacted, denied any lag in efforts to start production from its mines. “The company has been making sincere efforts to develop the mines allotted to it. Our core business is power generation. If coal blocks are taken away, the coal ministry should ensure coal availability for us,” said a senior official from the company.

Apart from NTPC, the ministry has decided to cancel the licences for blocks awarded to Damodar Valley Corporation, Andhra Pradesh Power Generation Corporation, Tenughat Vidyut Nigam Ltd and the Electricity Boards of Bihar and Jharkhand, among others, for non-adherence to norms, the official said. The private companies facing deallocation of blocks are VS Lignite and Baidyanath Ayurved Bhawan.