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Centre may cut down number of coal blocks linked to UMPPs in Odisha, Jharkhand

The government is likely to trim the coal blocks attached to the proposed ultra mega power projects (UMPPs) in Odisha and Jharkhand to ensure that the winning companies do not get excess coal with the projects. The coal ministry has asked its technical team to split two coal blocks which were attached to the Tilaiya UMPP in Jharkhand that had been surrendered by Reliance Power. The company last week dragged the government to Delhi High Court for cancelling a surplus mine attached to the Sasan UMPP in Madhya Pradesh. The coal ministry has written to the Central Mine Plan and Design Institute (CMPDI) to review the coal block allocation to the Tilaiya UMPP, a government official said.
The two captive blocks attached to Tilaiya — Kerandari B and C — have reserves of up to 1,200 million tonnes against the required 850-900 million tonnes of coal. The surplus coal will be sufficient to fire another 1,300-MW power projects. The move follows a Supreme Court directive that coal allocated for UMPPs should not be diverted to other projects, said the official, requesting not to be named.

The Supreme Court had on August 25 said that "the coal blocks allocated for UMPP would only be used for UMPP and no diversion of coal for commercial exploitation would be permitted". The government had in May cancelled a special dispensation to Reliance PowerBSE 0.57 % that allowed the company to use excess coal in three blocks attached to its Sasan UMPP in another private project.

The coal ministry on May 7 issued a gazette notification cancelling Chhatrasal coal mine that was surplus and restricted output of the other two. The company in its petition in court said that the availability of coal from Chhatrasal along with two other mines — Moher and Moher Amlohri Extension coal blocks — was a fundamental condition and the foundation of the bid, which resulted in offering highly competitive tariff. The petition said that Chhatrasal coal block was crucial for sustainability of competitive tariff of Sasan UMPP that was bagged at a competitive power tariff of Rs 1.19 per unit.

The Comptroller and Auditor General had in its report on coal block allotments alleged that diversion of excess coal from mines supporting Sasan and Tilaiya UMPPs would mean a benefit of Rs 1,20,087 crore benefit to Reliance Power. The coal ministry's guidelines require companies to sell surplus coal from captive blocks to the nearest subsidiary of state-run  monopoly miner Coal India at a price which meets their cost of mining.

source: http://economictimes.indiatimes.com