Standard Post with Image

PMO okayed Coal to Mahan Power, Ministry says can't give new Licence

The coal ministry is reluctant to follow the PMO’s instructions to allot coal supplies to private firms, apparently due to its experience in the coal blocks allotment scandal. Last month, it refused to honour the PMO’s endorsement of an Essar Power request seeking coal linkage for the 1,200-MW Mahan Power Project. Citing a negative balance of coal stock and prior commitments, the ministry wrote back saying it could not issue fresh supply licences.

“Keeping in view demand-supply position of coal from Coal India Ltd sources, there is no scope for issue of any fresh LoA (letter of assurance),” it wrote on February 12.

The PMO had endorsed granting a tapering coal linkage for Mahan on February 26 last year and followed it up with reminders on March 14, September 26 and November 4. The denial, said ministry officials, reflected the unease in the ministry about the PMO after former coal secretary HC Gupta was chargesheeted for following instructions on allotments.

Last June, the Central Bureau of Investigation questioned two PMO officials on how decisions were taken in the allotment of coal blocks and the role of the PMO. Keeping a safe distance, the ministry informed the PMO that Coal India and its subsidiaries were reporting a “negative coal balance” and “no new linkage/LoA is being recommended since 2010”.

Moreover, it said, 175 LoAs covering a collective capacity of 1,08,000 MWs had been issued of which firm fuel supply agreements had been signed for 78,000 MWs. “LoAs for the power project for remaining capacity of about 30,000 MWs are yet to be authorised for fuel supply agreement,” it said.

Mahan Coal is an equal joint venture between Essar Power and Hindalco. It plans to extract about 8.5 million tonnes of coal a year from the allotted captive block. Essar had asked for bridging coal linkage until it could start mining the block to cover the period until the mine was fully operational. Currently, the 600 MW unit 1 at Mahan I is being operated buying fuel from Coal India’s e-auction.

Though it received Stage 2 clearance by the environment ministry last month, the mining lease agreement with the Madhya Pradesh government has got stalled and local authorities say they will seek permission from villagers again after the General Elections to decide whether they want a mine or not.

Source-On Request