Bhadravati Coal Supplier Allowed Third Party Sale

The outgoing United Front government has agreed to a major deviation from the existing law governing private investments in captive coal companies.

The immediate beneficiary will be the Ispat groups Central India Coal Company (Cicco), the captive coal company supplying coal to the Bhadrawati fast-track power project, which will be allowed to engage in third-party sales. In other words, the coal company can sell its surplus coal to a party other than the Bhadrawati project promoters. However, the government will retain control over both the price and quantity of the surplus coal sales. The third-party buyer will also have to be cleared by the government.

Sources revealed that two other corporates were awaiting this decision before proceeding with their investments in power.

The governments decision follows the attorney-generals comments to the coal ministry. The ministry had sought the attorney-generals opinion as there were doubts whether the government could allow third-party sales under the present law. However, the attorney-general held that an exception could be made in this case and no amendment to the Collieries Act was required.

Under the present law, Cicco which is developing the captive coal mine for the 1080 mw Bhadrawati power project can sell coal only to the project. The Bhadrawati project is being promoted by Central India Power Co, a joint venture between the Ispat group, EDF of France and GEC of the UK.

At present, no private investment in coal mining is allowed unless the promoter of the coal company does not have a stake in a related power project. However, Cicco had expressed the desire to sell coal that proved surplus to the requirements of the power project to another party.

According to an agreement between the Maharashtra government and Cicco, the latter can sell coal to the MSEB if the related power project promoted by Cipco does not require coal from the captive mine.