Govt wants better fix on UMPP coal
With the Sasan coal issue blowing hot and other recent operational issues, the power ministry wants PFC to be sure on reserves before allocation
With excess coal becoming an issue of contention in the Sasan ultra mega power project (UMPP) of Reliance Power in Madhya Pradesh, the government has decided to be cautious and allot coal blocks only after a higher degree of certainty about reserves.
The ministry of power is likely to ask government-owned Power Finance Corporation (PFC) for exploration through an outside agency and be prepared with an indicative geological reserve figure at least a month in advance before seeking final bids for UMPPs.
The proposal to involve PFC came up after CMPDIL and MECL, the two agencies that currently conduct preliminary exploration, expressed their inability to conduct the operations since their resources are tied up for the next few years. In a recent ministry meeting, PFC was asked to apply for a prospecting licence within three weeks of allocation of coal blocks to the special purpose vehicles created by the company for implementing the projects. Since that could lead to a jurisdiction battle between the ministries of coal and power and delay the Chhattisgarh and Odisha UMPPs, a senior official in the power ministry said a final view was yet to be taken.
The official said the need to do such an exercise was also felt since it would give the bidders a greater degree of comfort while bidding on rates for UMPPs, that each involve generation of 4,000 Mw. “Sasan is not the only reason for this proposal,” he added.
PFC is the nodal agency for bidding out UMPPs, though the technical support is provided by the Central Electricity Authority. “PFC did not have any role to play in finding the reserves for coal blocks attached to UMPPs. The coal ministry, while allotting the blocks, used to give an indicative figure based upon the level of exploration done in those blocks,” said a senior PFC executive. He said he was not aware of the recent power ministry move.
An empowered group of ministers (EGoM) recently re-endorsed its earlier decision to allow R-Power (an Anil Ambani group-promoted company) to use excess coal from three mines allotted for its Sasan project in its nearby Chitrangi power plant. Tata Power, a rival bidder for Sasan in 2008, contested the government decision in the Delhi high court, saying the bid conditions were not clear on whether coal could be used for other projects. The court didn’t agree and the case is now being heard in the Supreme Court.
Of the four UMPPs allotted so far by the government, R-Power is implementing three, of which two are pit-head power plants with coal blocks attached. The EGoM kept in abeyance a decision on using surplus coal from mines attached to its Tilaiya UMPP, pending the finalisation of a surplus coal policy, said the power ministry official.
Sasan was allotted three coal mines of a total 750 million tonnes. Initially, only two blocks were attached to the project.