Coal news and updates

The Union coal ministry has given permission to Anil Ambani-promoted Reliance Power's Sasan Ultra Mega Power Project (UMPP) to increase coal production up to 17.20 million tonnes per annum (mtpa) from its Moher and Moher Amlohri extension coal mines during 2015-16.

 

The move comes after Reliance Power contested the decision to restrict coal production from the mines attached to the 4,000-Mw UMPP. In June 2015, the coal ministry had directed Sasan Power Limited (SPL) in Madhya Pradesh to limit annual coal production to 16 mtpa. It also did not revoke the cancellation of the Chhatrasal coal block attached with the plant.

 

The firm stated this would enable SPL to sustain its power plant operations, which are currently at about 100 per cent plant load factor (PLF). "Sasan UMPP would be able to generate additionally 2.2 billion units of electricity, which will benefit 420 million population amongst seven procurer states comprising MP, UP, Rajasthan, Haryana, Punjab, Delhi and Uttarakhand," said the firm. Senior company executives told Business Standard that R-Power would not give up its fight for the third coal block, Chhatrasal, which was awarded and then cancelled later. SPL was awarded Moher and Moher Amlohri and Chhatrasal coal block with the UMPP in 2007 when it bid the lowest rate of Rs 1.19 a unit for sale of power.

 

"The current decision is a welcome relief, but other issues have their own importance. So, they will follow their legal and regulatory pace.

 

Moreover, the enhancement of coal capacity is for the current financial year only. For the coming years, we need to understand the government process," said the executive. The letter issued by the coal ministry to SPL, reviewed by Business Standard said any further coal requirement would be considered on basis of PLF and coal quality.

 

"From 2016-17 onwards, any permission for producing more than 16 mtpa of coal would be considered after verification of the gross calorific value (GCV) figures... as the actual coal requirement is heavily dependent on the actual PLF. Any permission for the subsequent years would be considered based on the average PLF till December 2016 and GCV verification," said the letter.

 

A Supreme Court judgment in August 2014, cancelled all coal blocks allocations made over the past two decades except the ones awarded to UMPPs on bidding basis. The court also asked the UMPPs not to use surplus coal from the attached mines for commercial purposes.

 

When the project was awarded, Sasan UMPP had three mines - Moher, Moher Amlohri extension and Chhatrasal. The Union government, according to the letter, had promised to allocate the above three coal mines with aggregate capacity of 760 million tonnes. In May 2015, the coal ministry, through a gazette notification, cancelled the allocation of Chhatrasal saying the three mines surpass the amount of coal to be used by the plant and "surplus coal cannot be used by the promoter."

 

The company moved the Delhi High Court on July 31 contesting the government's move to take away one of the three blocks attached with the plant.

 

The company's plea in the court also mentions that Power Finance Corporation should buy the entire shareholding.

 

The company has argued that the coal reserves of the two mines are not enough for the power plant to run at 85 per cent PLF for a period of the power purchase agreement of 25 years. It will also hurt the capital investment already made, said the plea, as submitted to the Delhi High Court.