Coal news and updates

Successful bidder can use coal for any of its plants

October 30: Removing one of the major constraints or a potential controversy, the new Coal Mines (Special Provisions) Ordinance, 2014 promulgated on October 21, 2014 has allowed use of coal from a particular mine in any of the end-use plants of a particular promoter.

“A successful bidder or allottee may also use the coal from a particular Schedule I coal mine for any of its plants engaged in common specified end-uses, in accordance with such rules as may be prescribed” the Ordinance said.

In fact, lack of clarification in this context had created controversy after Reliance Power was allowed to use coal from a block linked to its Sasan ultra mega power project at some of its other power projects.

In fact, Tata Power had challenged the then government’s decision allowing the above on the ground that it was not clarified during the bidding process for the Sasan UMPP and if this was known to them beforehand, they might have bid differently.

The Ordinance further said a successful bidder or allottee or coal linkage-holder shall, with prior approval of the central government and in accordance with such rules as may be prescribed, be entitled to enter into certain agreements or arrangements with other successful bidder or allottee or coal linkage-holder, as the case may be.

This has been done for optimum utilisation of the coal mines towards the end-uses in public interest and to achieve cost efficiencies.

The clarification regarding swapping of linkages or mines is expected to benefit a number of power plants, industry sources feel.

“It has been found quite often that a power plant in West Bengal is required to take coal from a mine in Odisha as per linkage accorded whereas another power plant in Odisha is compelled to take coal from a mine in West Bengal. This leads to unnecessary increase in logistics cost as the plant in West Bengal could get coal from a mine within the state at much lower transportation costs, while the plant in Odisha could take coal from a mine in Odisha itself,” the sources added.