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DEC 12 2017

Output woes continue at auctioned coal blocks

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 12th DEC 2017


The production from coal blocks, awarded through the first auction in the country three years ago, continues to be very low. In the case of blocks awarded to the power sector, the production is nil.

An analysis of the 34 auctioned and 11 allotted coal blocks has revealed that the current production from these mines is half of what was envisaged annually over a 30-year period. This has also impacted the host states which have received barely 27 per cent of the annual revenue they were supposed to earn from these mines, as per the data available from the coal ministry and industry.

In the first ever e-auction in the sector in 2014, 34 coal blocks went to private companies including Hindalco, Balco, Jindal, JSW, Adani, GMR and Essar, among others. Of the Schedule II mines (referring to the ones under production when they were bid out), those of Monnet Ispat, Hindalco, Essar Power, Jaypee, Reliance Cement, BS Ispat have not commenced mining.

The government also allotted 11 mines to state energy departments for meeting their power demands. Other than Rajasthan and state-owned NTPC, none of the states/state-owned agencies is currently mining coal.

Production from the two mines allotted to Rajasthan has increased to 8.2 million tonne from 3.4 million tonne in FY14-15. NTPC commenced mining at Pakri Barwadih this year.  Others who received coal blocks were energy departments of Punjab, West Bengal, Karnataka and Damodar Valley Corporation.

The spokesperson of the ministry of coal Anil Saxena did not reply to a mail seeking comment on the production data and revenue. Coal ministry officials did not comment on the mines which are in legal battle with the government.

Cumulatively, the states were producing 14.43 million tonne in FY13-14, which increased to 17.6 million tonne in FY14-15. Now, it has come down to 8.4 million tonne during 2016-17. “Both Punjab and West Bengal are fighting legal cases over the appointment of mine development operator (MDO) for their mines and hence the delay,” said a government official.

Legal tussle has also stalled production from the coal mines which were allotted to private power players through reverse auction. Out of the 11, six mines are under production but the output has declined. Not even a single mine is close to the peak rated capacity or estimated annual production.

All power companies, which won coal blocks, have moved court to challenge the government’s decision to disallow pass through of quoted discount on coal cost on final power tariff, according to industry executives. While the government won the case in Delhi High Court, companies have now moved to the Supreme Court.

“Power companies have submitted that they want to surrender their coal blocks as pass through of quoted discount price was disallowed after the bidding was over,’’ another executive said. The power companies had quoted very low bid price with the assumption that they could pass on the cost, he added. But the rule was changed later and companies believe it would hurt their margins.

A statement issued by the ministry of coal on July 20, 2017, said, “the coal bearing state governments have received an amount of Rs 3,653 crore till June 2017 from the allocation of coal blocks/mines under the provisions of Coal mines (Special Provisions) Act, 2015.”

After a Supreme Court judgement in August 2014 cancelled all coal block allocation of the past two decades, the ministry of coal started re-allocation through transparent e-auctions. It allocated 34 operational coal mines to private companies through auction and to states through allotment for both power and non-power sector. The estimated revenue collection for mine bearing states over 30 years is pegged at Rs 2.85 lakh crore.


Delhi Rajasthan Punjab Adani Enterprise Limited West Bengal Damodar Valley Corporation Karnataka JSW Steel Ltd. Bharat Aluminium Company Ltd Monnet Ispat & Energy Ltd Damodar Valley Corporation Coal Tariff Ministry of Coal NTPC Ltd Energy Coal Mines Mine Developer and Operator Coal Block Hindalco Essar Essar Steel Essar Oil Ltd. Power B. S. Ispat Limited essar power PUNJAB

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