Coal ministry wants companies vying for coal blocks scrutinized

Coal ministry wants companies vying for coal blocks scrutinized

New Delhi: The coal ministry has asked state governments to do an exhaustive due diligence of the companies whose names have been forwarded to it for the allotment of 38 coal blocks.

Senior government officials say this step has been taken due to the embarrassment faced by the government over the Sasan power project, where it was discovered much later that the original promoters had misrepresented information in their winning bid. The verification will ascertain whether the claims made by the developers for project status in terms of obtaining land and water allocation and net worth are true.

“This scrutiny will help in weeding out non-serious players," a senior Central Electricity Authority (CEA) official, who did not wish to be identified, said.

The CEA had, on the advice of the power ministry, prepared the initial shortlist. A total of 38 coal blocks are to be awarded to the private sector. Out of these, 15 blocks were exclusively reserved for the power sector, with the remaining blocks to be given to non-power sectors such as cement, iron and steel.

The CEA had forwarded a list of 44 power project developers for 15 coal blocks to the power ministry. Thereafter, the power ministry, after a scrutiny, had pruned the list to 28 companies before forwarding it to the coal ministry.

The final shortlist includes RPG Group’s CESC Ltd, Essar Power Ltd, AES Chhattisgarh Energy Pvt. Ltd, Reliance Energy Ltd’s Rosa Power Supply Co. Ltd, Adani Power Ltd, Tata Power Ltd, GMR Energy Ltd and Lanco Infratech Ltd, among others.

In a letter written to coal secretary H.C. Gupta by Anil Razdan, power secretary, Razdan has said, “...Central Electricity Authority have informed that the authenticity of the data/documents supplied need to be separately verified."

Based on this observation, the coal ministry has asked the states of Jharkhand, Chhattisgarh, Orissa, West Bengal and Maharashtra to complete the exercise to avoid future controversy.

These allotments are critical because coal accounts for more than 50% of India’s commercial energy consumption and around 78% of domestic coal production is dedicated to power generation. These coal blocks alone have reserves of around 3.6 billion tonnes, capable of generating 18,000MW of power.

Shubhranshu Patnaik, an executive director at audit firm PricewaterhouseCoopers, said: “A detailed due diligence by the states is in order as the number of applicants for coal blocks is significantly high. It will later on help in the project’s progress. The point scale approach adopted is ineffective in case of large number of applicants."

The government is keen to fast-track the allotments and may schedule a meeting of the screening committee after the ongoing session of Parliament comes to an end.

The screening committee is headed by the coal secretary and has representation from the ministries of power, steel and environment and forests, apart from the state governments of Jharkhand, Chhattisgarh, Orissa, West Bengal and Maharashtra.