Coal Min threatens to cancel allocations to NTPC, 7 others

The Union government has threatened to cancel coal block allocations to eight companies, including the country's largest power generator and 'maharatna', state-owned NTPC Ltd.

The ministry has issued showcause notives to these firms for failure to develop blocks allotted years before, despite repeated reminders.

The coal ministry has prepared a list of 93 captive coal blocks where development has not been satisfactory and is currently in the process of threatening the block holders of de-allocation by slapping showcause notices on them.

Since September 22 , the ministry has issued similar notices to at least 30 such firms.

Apart from NTPC, the other seven issued notices today are Maharashtra State Mining Corporation, Tamil Nadu Electricity Board, Bhushan Ltd, Bihar Khanij Vikas Nigam, Yamuna Coal Company, Jayaswal Neco Ltd and Mahavir Ferro Alloys.

NTPC has received flak for delay in development of three blocks -- Chattibariatu, Kerandari and Dulanga -- allotted to the company in 2006.

While the first two, in the North Karanpura coalfield in Jharkhand, were to start production in July 2009, Dulanga in the Ib Valley coalfield in Orissa was expected to begin production by 2011, by the original plan.

The three blocks together have estimated reserves of 730 million tonnes and have a production capacity of 20 mt per annum.

India's annual coal demand is 500 mt and the country wants to achieve a captive production target of 51 mt by 2012.

The showcause notice has asked the company to explain, within a month, reasons for the delay in developing the three blocks.

And asks, "Why the delay should not be held as violation of the terms and conditions of the allotment of the blocks?"

Failing which, "It would be presumed that your company has no explanation to offer and action as appropriate would be taken against your company for de-allocation of the said coal blocks."

In all, NTPC has been allotted eight coal blocks, with reserves of around five billion tonnes, in the past six years. None of these have taken off.

The power generator has set for itself a target of ramping up coal production from its captive mines to 47 mtpa by 2017.

'Only assurances'

In its review meeting in July this year, the ministry noted no serious efforts were made by NTPC to develop the blocks, even after repeated assurances.

"It is seen that the company has repeatedly failed to keep its promises made on earlier occasions to this ministry and is thus non-serious about timely development of the block," the notice states.

A similar notice was served by the ministry to NTPC late last month for the delays in development of two other coal blocks -- Pakri Barwadih, allotted in October 2004, and Talaipalli, allotted in January 2006.

While the former, located in North Karanpura, was to start production by April 2008, Talaipalli in the Mand-Raigarh coalfield in MP is expected to begin production by March 2012.

These two blocks together have estimated reserves of 2,600 million tonnes and have a production capacity of 30 mtpa.

On this issue in an interview with Business Standard earlier this year, former NTPC chairman R S Sharma had said, "Coal is my survival. Why would I sit on it?"

According to the government, however, the company's dallying in commencing production has put at stake India's captive coal production target. NTPC's contribution to captive coal production is important, as it alone accounts for around 10 per cent of the 50 billion tonnes of reserves in 208 coal blocks allotted by the government so far.

The company denies the allegations of delays.

"As per the analysis by Bain & Company, international consultant, the benchmark for development of coal blocks internationally is up to seven years, whereas the same takes up to 17 years in India," it says.

Among the reasons given are problems in getting clearances and evacuation constraints. The environment ministry's latest move to categorise coal-bearing regions as 'Go' and 'No Go' areas is also a problem, as some of delayed blocks are in 'No Go' areas.

Development and investment-related activities in NTPC's Dulanga block, for instance, are getting delayed as it falls in one of the indicative 'No Go' areas, which are regions of dense forest cover.

NTPC's share price at the Bombay Stock Exchange closed at Rs 213 on Monday, down 0.6 per cent, as compared to the previous day's close.