Coalgate verdict: Odisha sees no immediate impact

Court order may spell trouble for power investors

The Odisha government does not foresee any immediate impact on power supplies because of the Supreme Court’s order cancelling 214 coal blocks allotted between 1993 and 2010.

“For our state, there will be no immediate impact of the apex court’s order. The power stations of NTPC and a few independent power producers (IPPs) supplying power to the state grid are already running on linked coal supplies. But we have to see the long-term implications of the court’s order. After studying the SC order in depth, we will be able to assess the long-term impact,” said Pranab Praksah Das, state energy minister.

A senior state government official said: “The state will not suffer any immediate loss as far as power supply is concerned. However, the apex court’s order may spell trouble for the investors in the power sector, especially those who have pumped in sizeable investments on end-use projects linked to the now quashed coal blocks.”  While most IPPs chose to remain tight-lipped on the implications of the SC order, an official of an IPP said, on condition of anonymity: “Development of the coal blocks was already marred by delays. The latest SC order has only dashed our hopes.”

The coal ministry had allocated 32 blocks in Odisha all for captive consumption. Of this, seven had already been de-allocated by the ministry. The remaining 25 blocks now stand cancelled after the apex court ruling. Out of the 32 blocks, only the Talabira-I coal block allotted to Aditya Birla Group-owned Hindalco Industries had commenced production.

The state government has signed a Memorandum of Understanding (MoU) with 28 IPPs, who had committed investments to the tune of Rs 1-lakh crore, envisaging a total generation capacity of 37,510 Mw with the state share being 5,887 Mw. The IPPs have already grounded investment of Rs 30,000 crore on their projects.

Coal blocks were allocated to 10 IPPs, while 10 others had obtained coal linkages. However, none of the coal blocks allocated to the power producers was able to commence mining owing to delay in obtaining the necessary clearances.

Till date, three IPPs have commissioned thermal power capacity of 4,050 Mw, with the state being entitled to a share of 947 Mw from these commissioned units. The projects that have gone into generation include Vedanta Group firm Sesa Sterlite (2,400 Mw) at Bhurkamunda near Jharsuguda, GMR Kamalanga (1,050 Mw) at Kamalanga near Dhenkanal and Jindal India Thermal Power (600 Mw) at Derang near Angul. All the three power producers were running their plants on linked coal supplies.