Govt firms assigned coal blocks cannot tie up with private cos

Siddhartha P. Saikia New Delhi | Updated on March 12, 2018

The Government has decided that no Central or State public sector company would be allowed to form a joint venture with private firms if it has been allotted coal block through ‘Government Dispensation Route.’

The nodal Coal Ministry on Friday has modified the guidelines for coal block allocation. “This decision would be communicated to the States,” a Coal Ministry official told Business Line.

In addition, if a Government power producer is allotted a block, it must have a power purchase agreement (PPA) with a State Electricity Distribution Company (Discom), the Ministry has decided.

The Coal Ministry’s decision has come in the wake of cases where power producers with captive coal blocks are selling electricity at higher tariff in the spot market. In future, the Government intends to allocate coal mines to power producers to source cheaper coal and keep electricity tariffs under check.

Further, if the company appoints a Mine Developer and Operator (MDO) it should be through competitive bidding.

The Coal Ministry proposes to allocate 54 coal blocks. Of this, 16 blocks have been earmarked for the power sector and another 16 have been reserved for allocation under the Government dispensation route.


The Coal Ministry said mines would be allocated ‘strictly on the basis of comparative analysis’ to Central or State companies.

The Ministry would analyse the requirement of the State and check if the utility has already been given coal linkage or allocated captive mines in the past.

For the Power Sector block allocation, the Coal Ministry will give the details of mines and respective reserve price to the Power Ministry, which in turn would conduct tariff-based competitive bidding for setting up new units.

These new units would be accompanied with a captive mine for sourcing fuel.

NTPC blocks

The Coal Ministry would consult the Law Ministry on re-allocation of three mines to NTPC.

The blocks are Chatti Bariatu, Chatti Bariatu (South) and Kerandari.

On Thursday, Power Secretary P. Uma Shankar said the Government has decided to give back blocks to NTPC.


Published on November 23, 2012

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