The power ministry has questioned a high-level committees suggestion on asking all coal block allocatees impacted by the environment ministrys classification of No Go areas to apply afresh through the new competitive bidding route. Arguing against the suggestion,the ministry has said that after having made substantial investments,if developers are now asked to go for market determined coal price,it will adversely impact Power Purchase Agreements (PPAs) signed with utilities.
With a bitter turf war between the ministries of coal and environment refusing to die down,the power ministry now finds itself caught in an impasse and is trying to broker an acceptable solution. The issue of asking existing allocatees to apply afresh was among a slew of proposals deliberated by the panel headed by Planning Commission member (energy) B K Chaturvedi in a recent meeting. Top power ministry officials as well as their counterparts from other ministries,including coal,were present at the meeting. The committee met in the wake of the need to ensure greater clarity on whether existing block holders should be treated at par with fresh applicants for the proposed competitive bidding process or some alternate dispensation be created for allotment of alternate blocks to them.
The environment ministry,in its classification of forests having coal-bearing areas into Go and No Go areas,has identified a total of 203 blocks (capable of supporting generation of 13000 MW) falling under the latter category. However,field-level verification has revealed that in at least 10 blocks,power companies have made substantial investments,while in the remaining 193,power,steel,sponge iron and cement companies have invested considerably as well. Now,with the enivironment ministry identifying these blocks as No Go areas,the government has set up a committee to examine the possibility of allocating alternate blocks to them.
In the meeting,the committee made it clear that existing allottees should not be equated with fresh applicants seeking coal blocks. The panel argues that of the available coal blocks to be cleared by the environment ministry,50 per cent be put up for auction and the remaining be reserved for alternate coal block allottees.
Another suggestion by the panel was to consider on,a priority basis,only those who have made substantial investments,while the rest be asked to participate in the auction route with preference given to them. Finally,in another recommendation,the committee said,Ask all of them to come through new competitive bidding route for which rules would be framed under the new Mines and Minerals (Development & Regulation) Bill,likely to become a law soon.
But the suggestion to mandate all to bid afresh for blocks didnt go down well with the power ministry,whose top brass,led by power secretary P Umashankar,pointed out that a large number of power developers had already incurred significant investments for implementation of their projects based on the allocation of captive blocks. At this stage,if the developer is asked to go for market determined coal price,it will have an adverse impact on the PPAs signed with the utilities, the ministry contended. Instead,they said,preference should be given to end-use industries who have made significant investments in placing orders for plant and equipments,land acquisition and made irrevocable financial commitments.
They also sought due preference for Ultra Mega Power Projects (UMPPs) based on tariff bidding and projects coming up based on super-critical technology for which maharatna NTPC has been asked to go for bulk tendering. If the identified blocks for alternate allotment have enough reserves,then the allotment could be made on sharing basis, they suggested. Coal secretary C Balakrishnan told the meeting that a number of pending cases of captive end-user industries needing alternate blocks for allotment in the future would be cleared once the environment ministry took a view on the coal blocks in No Go areas.