Allow use of captive mines as collateral by UMPPs: govt panel

The panel strongly recommended against allowing the developers to divert coal from the captive mine allocated to their UMPPs


The committee was set up following differences between coal and power ministries on whether an UMPP can be allowed to assign or mortgage its coal mine or not. Photo: Getty Images
The committee was set up following differences between coal and power ministries on whether an UMPP can be allowed to assign or mortgage its coal mine or not. Photo: Getty Images

New Delhi: An inter-ministerial panel has favoured allowing ultra mega power project developers to use coal mines as collateral for raising funds for their projects that aim to provide affordable power to all.

However, the panel headed by power ministry’s additional secretary (thermal, transmission, O&M) Shalini Prasad strongly recommended against allowing the developers to divert coal from the captive mine allocated to their UMPP (ultra mega power projects).

“The committee has firmed up its view and will submit its report to the coal ministry in a couple of days. There is a broad consensus that the UMPPs can assign or mortgage their coal mines to their project lenders,” a official said.

“The committee set up by the coal ministry has also opined that in case the mine is assigned or mortgaged, the coal should not be allowed to be diverted for other projects. This will ensure smooth functioning of these UMPPs which are aimed at providing cheaper power to consumers.”

The committee was set up following differences between coal and power ministries on whether an UMPP can be allowed to assign or mortgage its coal mine or not.

The panel had two rounds of discussions before firming up its view. The committee, which also has two joint secretaries (coal and thermal) from the power ministry and one from the ministry of law, took up the issue after Reliance Power’s application seeking nod from the Madhya Pradesh government to use its coal mine allocated to Sasan UMPP as a collateral was rejected by the coal ministry.

The rejection was communicated to the Madhya Pradesh government. In case UMPPs are allowed to use their coal mines as collateral, it will help them raise money smoothly to run their plants.

The main purpose of setting up of UMPPs is to make available cheap affordable power for all. Thus, these projects are allocated through a single-window mechanism with all mandatory permissions and tying up required resources like land, coal and water beforehand to set up and run plants seamlessly.

Sponsored Links by Revcontent