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Birbhum Coal: A possible game-changer for Bengal

Bengal Birbhum Coalfields (BBC), the newly formed company in which the government here has the largest share, could well be a game-changer for the industry-starved state.

The company will develop Deocha Pachmi, the country's largest mineable coal block, in Birbhum district. The block has estimated reserves of two billion tonnes and inferred reserves that could stretch up to 20 bn tonnes; the state's total coal resources have been estimated at 31 billion tonnes.

Six state power companies —from Bihar, Karnataka, Punjab, Tamil Nadu, Uttar Pradesh and SJVN Ltd — also have a share in the company.

"At its peak, the employment this project will generate could be 100,000," BBC's chairman, Rana Som, said. The investment could be Rs 10,000 crore, including that of the mine development operators.

Som, when NMDC chairman, had pursued the Deocha Pachmi block. A memorandum of understanding had been signed in 2008 between central government-owned NMDC and the West Bengal Mineral Development and Trading Corporation, for an equal joint venture to develop the block. It had also tried to rope in Coal India at one point. Finally, in 2013, the block was allocated to seven entities through the government dispensation route.

"We will float a global Expression of Interest shortly, for mine development. The coal is perfect for power plants," Som said. An estimate of the initial investment is being prepared, so that the different entities can infuse equity into the newly formed company.

There is, however, a challenge. "It is a difficult mine. There is a 70-80-metre thick layer of basalt rock. But, basalt has economic value. We could create a corpus by exploiting the rock," said Som. That apart, the project has everything going for it. "It is non-agricultural barren land. This is India's largest mineable coal block," said the chairman. For Bengal, which has seen some violent battles for land rights, it could add some certainty to the project.

"The potential is huge. I am not only looking at the power sector but ancillary units will come up like fertiliser, and all this will translate into some major employment," Som added.

For the Mamata Banerjee government, which hasn't seen much of significant fresh investment, this could be a feather in the cap. Banerjee's stand on Special Economic Zones (SEZs) and land acquisition has been a block to major investment, holding back the planned campuses of Infosys and Wipro.

It was a pre-electoral stand to not grant SEZ status to companies or facilitate land acquisition for industry. However, any big project would require significant tracts of land, where government intervention could become necessary.

source: http://www.business-standard.com