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NTPC Limited’s decision to hive off its coal mining activities into a separate subsidiary seems to have run into bureaucratic hurdles.
The public sector undertaking had announced in August 2019 that it had incorporated a subsidiary, NTPC Mining Limited, to look after its commercial coal mining business. But, NTPC is still awaiting nod from the Centre for the same.
It was expected that NTPC will be transferring 10 coal mines that it had won in earlier bids into this subsidiary and will operate it as a wholly owned subsidiary under the NTPC group. While the approvals for setting up and incorporating the subsidiary have been given, it is the transfer of mines into this subsidiary that is being questioned.
“There are statutory issues which are known to NTPC. It relates to the condition of end use. These mines were bid only to end users of coal. We cannot have a situation where the coal mine and power plants that will use this coal are owned by different entities,” a senior Coal Ministry official told BusinessLine .
Logic for mining subsidiary
NTPC officials in the know said that with a separate mining company, NTPC would be better equipped to hire specialised manpower for the task.
“We are essentially a power generation company right now. Mining requires a completely different skill set,” an NTPC official said. An approval from the Department of Investment and Public Asset Management (DIPAM) has already come for this subsidiary. But the Central Government Ministries have expressed concern that the NTPC might eventually want to divest its stake in the coal mines and the mining subsidiary. NTPC officials say that they have assured the Centre that there are no plans to divest the coal mining business. This is the reason for a delay in getting approvals.
NTPC-PGCIL JV struck down
Another corporate decision of NTPC Limited that has gotten stuck is the proposal of a joint venture (JV) with Power Grid Corporation Limited (PGCIL) to enter the distribution business. It is believed that the proposal for this JV has been struck down though the reasons are unclear.
In June 2019, NTPC and PGCIL had signed an agreement to set up the National Electricity Distribution Company Limited (NEDCL) on a 50:50 equity basis.
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