NTPC's captive mining in the slow lane

A 2014 judgment cancelled all coal block allocations made over two decades

Ten captive coal mines with total annual production capacity estimated at 106 million tonnes (mt) would have translated into assured fuel supply for thermal power giant NTPC. However, despite being at several levels of clearance and approvals for years, none of these is operational.

NTPC lost five of its mines allotted to it in a Supreme Court judgment dated August 2014. The judgment cancelled all coal block allocations made over two decades. Chatti-Bariatu & Chatti-Bariatu (South), Kerandari in Jharkhand, Dulanga in Odisha and Talaipalli in Chhattisgarh were re-allocated to NTPC last year in an e-auction. Of the 10 it now has, five were allotted by the central government and the others are joint ventures with states.

Its cumulative spending on all captive mines was Rs 3,018 crore till December 31, 2015, including Rs 1,608 crore on Pakri Barwadih alone, the richest mine owned by NTPC, said a senior company official.

NTPC said these delays in coal mining were not hurting its plans. The company said major statutory clearances or approvals required for development of these blocks were in place. "For Kerandari, stage-II forest proposal is under process. Land acquisition and various project development activities are under progress in these coal blocks. Mining operations will be started after appointment of the respective MDO (mine developer-cum-operator)," said the company in an e-mailed response. Pakri-Barwadih in Jharkhand, allotted in 2010, is facing troubled times since then. The company said, "NTPC has progressed well by creating infrastructure for block development activities and obtaining statutory clearances/permissions/approvals for the mines."

Pakri-Barwadih recently came into the limelight when an investigative report by The Sydney Morning Herald said Australian mining major Thiess paid a bribe to NTPC and the ministry of power to secure a mining contract in India in 2008.

The report titled 'How one "fixer" earned $2.2 billion over 20 years from Thiess' has named Syam Reddy, a Hyderabad-based mining contractor who "offered as much as $16 million in bribes to officials in order to have the contract awarded to Thiess". Asked by this newspaper, an official spokesperson of NTPC said no such contract was awarded.

According to the NTPC website, Thiess Minecs India was appointed MDO on a global tender for development and operation of Pakri-Barwadih in November 2010 for a period of 27 years at an estimated contract value of Rs 23,000 crore. Theiss failed to make any headway. "In toto, an opportunity of 1,170 days was given for the development phase," the company said. A statement dated May 13, 2014, said, "NTPC had no option but to terminate the contract on May 7, 2014, with a notice period of 45 days."

NTPC had a few months earlier appointed Thriveni-Sainik JV as MDO for Pakri Barwadih for 27 years. The peak annual production will be 15 million tonnes. Mining is yet to commence, said a company official.

NTPC has an installed capacity of 46,653 Mw with 18 coal-based, seven gas-based, eight solar renewable, one hydro and eight subsidiary/joint venture power stations. It received 39.7 mt of coal in the December quarter of 2015-16, as compared to 39.6 mt in the same quarter a year before. The current availability at most NTPC units is 18 days. Surplus supply, it recently said, had reduced its variable charge for coal to Rs 1.76 per unit as against the Rs 2.02 per unit in 2014-15.