Coal news and updates

The coal and power ministries are at loggerheads over the rejection of a plea from Anil Ambani¬led Reliance Power , which sought to mortgage coal blocks attached to its 4,000 MW Sasan Ultra Mega Power Project in Madhya Pradesh to lenders of the plant.

In a rare case, the war of words between the two ministries began after the decision declining the company's request was made. The coal ministry, in a letter on May 10 to Reliance Power and the Madhya Pradesh government, communicated its dissent in granting permission to assign mining lease of Moher and Moher Amlohri Extension coal blocks as security to lenders of the Sasan project. The letter said the decision was made based on the power ministry's view that the contract and power purchase agreements of Sasan plant do not provide for such mortgage.

The power ministry has now written to the coal ministry that it never communicated such view. "Sasan contract documents permit mortgage of assets. The coal ministry has been asking whether coal blocks are part of such assets. We are not the nodal ministry for coal. That is a call that ministry has to take," a top power ministry official told ET on the condition of anonymity.

The two ministries are at conflict over the minutes of a meeting that took place between senior officials early this month. A coal ministry official said the minutes of the meeting noted power ministry officials' view, based on which the rejection took place. The coal ministry official declined to comment whether the indecisiveness will lead to reconsidering the decision to decline mortgage. Reliance Power in 2012 approached the coal ministry seeking permission to assign the mining lease of Moher and Moher Amlohri Extension coal blocks.

The mining leases for the blocks were executed between the state and Reliance Power in September 2011. The company told the central government that mortgage was a prerequisite for the Rs 14,500 crore debt that the company took from a consortium of 14 banks, led by State Bank of India, in April 2009.

Source: Economic Times