No windfall gains in coal mine allocation: NTPC

March 22, 2012 10:58 pm | Updated July 21, 2016 01:51 am IST - NEW DELHI:

Refuting claims that even pubic sector undertakings had benefited from the failure of the government to auction coal assets, state-run NTPC, on Thursday, said it had not reaped any windfall profit from the coal mines allocated during 2004-09.

“There is no way by which NTPC can make windfall profit out of the coal produced from these mines as, under the CERC-regulated regime, the cost of coal from these mines will be pass-through in the power tariff. Therefore, it will only help reduce the ultimate cost of power at the end-user,” NTPC Chairman and Managing Director Arup Roy Choudhary said. Fuel accounts for about 80 per cent of tariff of power produced from a coal-fired plant.

Mr. Choudhary said the coal mines were allocated to meet some portion of NTPC's coal requirement since Coal India was not able to meet the company's requirements. “These mines, which were allocated to NTPC, had to be developed, that is, surveys, soil investigation, environmental clearance, mining plan approval were to be done by NTPC before any activity could start. Now, at one of the mines allocated, removal of over-burden has been started, Mine Developer-cum-Operator (MDO) has been appointed for one more mine and appointment of MDO for two more mines is in the process,” Mr. Choudhary said.

In a statement here, the Confederation of Indian Industry (CII) called for the need to introduce competitive bidding for allocation of captive coal blocks.

Since 1993, around 213 captive coal blocks had been allocated. Of which, only 28 had commenced production till date, it said.

During the last three years, the government allocated 42 blocks but none of them has started production. Thus, it is evident that the allocation of coal blocks without the introduction of competitive bidding has led to the tardy development of coal blocks. “For viable and sustainable development of power sector, it is imperative that supply of coal increases at a rate which is at least equivalent to the growth in coal-based capacity addition.

One way to achieve this is by auctioning coal blocks through competitive bidding. This method will not only augment the future coal supply but will also ensure that only serious players bid for the development of coal blocks,” it said.

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