NTPC’s mining plan held up over approvals

NTPC’s mining plan held up over approvals

State-run power generation firm NTPC Ltd’s plans to secure fuel supplies have hit a roadblock, with the utility’s efforts in securing clearances from India’s ministry of environment and forests (MoEF) for its captive coal blocks getting delayed.

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India’s largest utility was allotted eight coal blocks by the government to give it a stable source of coal that would cushion NTPC against supply and pricing disruptions. The delay assumes greater significance in view of the recent coal price hike by Coal India Ltd, the utility’s primary coal supplier, by around 10%.

“None of NTPC’s captive coal blocks have received MoEF clearance. This will impact their efforts of securing coal supplies," said a senior official of Central Electricity Authority, or CEA, India’s apex power sector planning body. He did not want to be named.

The blocks given to the company are Pakri Barwadih (1,600 million tonnes, or mt), Kerandari (229 mt), Chatti Bariatu (243 mt), Chhati Bariatu South (354 mt), Dulanga (260 mt), Talaipalli (965 mt), Brahmini (1,900 mt) and Chichro Patsimal (356 mt).

A senior NTPC executive, who did not want to be identified, said the utility had received environment clearance for the Pakri Barwadih block in Jharkhand and forest clearance for the block was shortly due.

While NTPC maintains that it is confident of starting coal production from its captive blocks shortly, the utility’s captive coal mine plans have been delayed. Pakri Barwadih and Chhati Bariatu South blocks were allocated in 2004 and 2007, respectively, with the rest of the blocks being allocated in 2006.

“We expect to get the forest clearance for the Pakri Barwadih block in Jharkhand shortly, after which we will start mining. The clearances for the remaining seven blocks are in process," the executive said.

NTPC had earlier planned to start coal mining from the Jharkhand block by the end of 2007. Mint had reported on 11 October 2007 about procedural and infrastructural delays that upset its plans, after which the company had set an end-December 2009 target.

Jairam Ramesh, minister of state for environment and forests, did not respond to phone calls or to a message left on his cellphone.

Fuel supplies are critical for NTPC as most of its coal-based projects don’t have sufficient stocks. At least 80% of its installed capacity of 30,644MW is coal-based. NTPC used 125 million tonnes per annum (mtpa) of domestic coal and 6.41 mtpa of imported coal in 2008-09. However, a majority of its coal-based projects don’t have 15 days’ coal stock as mandated.

“Longer gestation periods for mine development can result in cost overruns and investment risks, which may choke fund flows into coal mining as well as power generation," said Dipesh Dipu, principal consultant, mining, with audit and consulting firm PricewaterhouseCoopers.

“Creation of a combined and empowered coordination committee with representations from all stakeholders for awarded coal blocks may lead to quicker development of mines. Also, the sooner the flawed captive coal mining policy is amended, the better it will be for the health of the economy as companies with no expertise and prior experience find managing the mining projects challenging," he added.

NTPC plans to add 22,430MW of capacity by 2012. Of this, 15,180MW will be through coal-based power generation, 4,550MW through gas-based generation and the balance from hydropower. The utility has been trying to secure coal and gas supplies from overseas but has been unsuccessful till now.

Padmaparna Ghosh contributed to this story.