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Coal block de-allocation to hit Rs 8,000 cr power project of OPTCL

Sadananda Mohapatra  |  Kolkata/ Bhubaneswar 

The fate of 2400 Mw coal-fired power plant proposed by Odisha Thermal Power Corporation Ltd (OTPCL) now hangs in balance after both its promoters lost coal mines allotted to them.

The company, which claims to have completed the land acquisition process by the end of July 2013, is also undecided over how to start the construction for the Rs 8,000 crore plant as it is in search of a strategic partner to sell its 74 per cent stake.

OTPCL was formed by Odisha Mining Corporation (OMC) and Odisha Hydro Power Corporation (OHPC) in 2009 with both the state PSUs having equal stake in the joint venture (JV) company. The proposed 2400 Mw power plant in Angul district was to use coal from the mines allocated to the promoter companies.

Earlier this month, the Union coal ministry de-allocated the Mandakini-B coal block allotted to OMC jointly with three other state PSUs, while the same fate befell on OHPC a week later when the ministry cancelled the Baitarani West coal block given to it along with two other players for inordinate delay in developing the mines. These blocks were allocated in 2007.

The ministry decision was based on the recommendations by Inter Ministerial Group formed by the Centre to scrutinise the utilisation of coal blocks after the coal scam row.

OPTCL, however, said it will anyhow arrange the fuel for its power pant. "We will get coal linkage to run our plant even if there is no coal block to fall back on. Besides, OTPCL itself has applied for coal block and we hope, after these cancellations the Centre would consider allocating one block to us,” said B S Panda, chief executive director of OTPCL.

The company's plan to get a coal block seems far from reality as the central government has already decided to auction the coal blocks from 2012 onwards. As far as coal linkage is concerned, the government is in no mood to entertain fresh applications for next three years given poor coal output by state-run miner Coal India Ltd (CIL).

"I do not think the power plant proposal will ever take off given these uncertainties,” said a source in the state government. OTPCL was to supply all the power generated at its plant to Gridco at a tariff determined through competitive bidding process. The sources said, even if the plant goes ahead with linkage plan, then the power purchase cost would escalate as coal supplied in linkage agreement will be costlier than the coal produced from mines owned by independent power producers (IPP).

About nine IIPs intending to set up their plants in Odisha have been allotted coal blocks within the state. They are mandated to sell a portion of their generation to Gridco at a rate determined by Odisha Electricity Regulatory Commission (OERC).

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First Published: Sat, December 15 2012. 00:41 IST
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