New Delhi: The coal ministry has allocated 27 coal blocks with a total coal reserve of 8,163.73 million tonnes (mt) and, for the first time, sought bank guarantees from government companies to ensure timely execution of the mining operations.
“We have received bank guarantees worth Rs550 crore. Out of the 27 blocks, 10 blocks are for power projects with the capacity to generate 16,000MW of power,” said a senior coal ministry official, who did not wish to be identified.
“Once these blocks are mined the power generation capacity that they can support will also increase,” he said.
The allocations have been made under the government company dispensation scheme and the commercial mining scheme.
Blocks allocated under government company dispensation scheme to the power sector can only be used for power generation claimed by the allotee. In the case of allocation made under the commercial mining scheme, the coal after being mined can be sold to other users.
The power sector companies to which the blocks have been allocated with total coal reserves of 6,315.98mt include India’s largest power generation company NTPC Ltd, Damodar Valley Corp, Opgenco, Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd, Maharashtra Power Generation Co. Ltd (Mahagenco) and Gujarat Power Corp.
The companies to which blocks with total coal reserves of 1,847.75mt have been allocated for commercial mining include the state mineral development corporations of Jharkhand, West Bengal, Andhra Pradesh, Madhya Pradesh, Chhattisgarh and Maharashtra.
An industry analyst, who did not wish to be identified citing commercial considerations, said: “On one hand, it is a good step for the government power generation companies. While on the other, it is a retrograde step for the private power developers.”
“While the government companies get blocks easily, the independent power producers (IPPs) have to go through a stringent bid process. Once the government companies get the blocks they tend to strike deals with them,” he added.
Coal accounts for more than 50% of India’s commercial energy consumption and around 78% of domestic coal production is dedicated to power generation.
India’s power sector is expected to need 545mt of coal by 2012, not counting the new needs of the ultra-mega projects.
Domestic coal supplies are only expected to provide around 482mt, leaving a shortfall of around 63mt.