Sasan UMPP: Centre in a fix over returning coal block

Debabrata Das Richa Mishra New Delhi | Updated on January 19, 2018

Anil Ambani

Anil Ambani power company wants block back, but no provision in the law

Taking back the Chhatrasal coal block from Anil Ambani Group’s ultra mega power project Sasan Power Ltd has opened a Pandora’s Box for the government. While the Coal Bearing Areas (Acquisition and Development) Act allows the government to take back the acreage, it is silent on returning the same to the contractor, if and when issues are resolved.

“Even if we want to return it, we cannot do so as the Act does not provide for it. Returning will require amending the Act,” a senior government official told BusinessLine.

The Sasan issue has compelled the government to look at a way out for similar cases in the future. The Ministry is currently seeking legal opinion on a possible solution for returning the blocks to the contractors in case they are found to be not erring.

The Anil Ambani Group company has taken the Coal Ministry to court on the issue after its attempts to convince the latter to reconsider its decision of de-allocating the Chhatrasal block given to the UMPP met with little success.

In May 2015, the Ministry had de-allocated the block, following the Supreme Court directive that the surplus coal could not be used for any other plant. The Coal Ministry’s decision to de-allocate Chhatrasal was a follow up to the Supreme Court’s decision in September 2014 which cancelled 204 coal block allocations and allowed ultra mega power plants to keep their coal blocks, but prevented any diversion of fuel from such acreages.

The decision of the Coal Ministry was challenged in the Delhi High Court by Reliance Power, parent company of Sasan Power Ltd, in July 2015.

Sections 10, 11 and 12 of the Coal Bearing Areas (Acquisition and Development) Act which relates to the rights of land bearing coal, stipulates that the Central government will hold the sole right over such land. As regards transfer of land, the Act just provides that the government can only hand it over to a State-owned company.

In June 2015, the Ministry further directed Reliance Power to restrict mining from Moher and Moher Amlohri Extn to 16 million tonnes annually as against the 20 million tonnes a year. Reliance Power has maintained that it needs to operate the Moher and Moher Amlohri Extn at 20 million tonnes per annum to meet Sasan’s requirements.

The company, in its submission to the Delhi High Court, has said that it is unable to meet coal requirements at Sasan and needs to operate the Moher and Moher Amlohri Extn blocks at 19 million tonnes.

By rough estimates, 1 unit of electricity production requires 1.05 pounds of coal which would mean to operate at full capacity the 4,000 MW, the Sasan ultra mega power plant will require 16.68 million tonnes of coal. However, this would vary on the quality of coal and the heat generated by burning that coal.

“We currently take out 16 million tonnes per annum and that is our requirement. But one cannot be sure of the quality of coal going forward therefore we want permission for 20 million tonnes to keep it as a reserve,” a Reliance Power official had earlier told this newspaper.

The Gazette Notification on deallocation of Chhatrasal Coal Block

Published on February 11, 2016

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