Pvt firms can get into lignite mining

The government has decided to break the monopoly of public sector Neyveli Lignite Corporation (NLC) in mining of lignite and open the doors for private sector entry.

The government last week issued orders for awarding the first lignite coal mine in the country to a private company for captive use. The Gurha (east) lignite block in Bikaner district of Rajasthan has been awarded to Marudhar Power for generating power in the state.

In yet another decision, the Union coal ministry also decided to allocate two lignite blocks of Kharsalia II and Surka III in Gujarat to state government-owned Gujarat Power Corporation which is setting up a 375 mw capacity power plants at the two places.

Hyderabad-based KSK Energy Ventures-promoted Marudhar would be setting up a 150 mw group captive power plant at Raneri in Rajathan at a cost of Rs 750 crore. Rajasthan has the second largest deposits of lignite after Tamil Nadu.

The mining lease has been granted for 30 years within which the block would produce about 40 million tonne lignite translating into a production of 1.33 mt annually.

S Kishore, director, KSK Energy Ventures, told Business Standard that work on the first stage of plant for 75 mw would be completed in two years' time while the second phase would be commissioned in the following six months. He said that the power plant would be developed with debt-equity ratio of 70:30.

Loans of about Rs 500 crore would come from banks and financial institutions. The parent company KSK would hold 37 per cent equity and KSK-controlled venture fund Small is Beautiful would put in another 26 per cent equity.

Another 33 per cent would be held by the power plant's consumers including cement, steel and other metal companies. The company was in talks with foreign companies for a picking 11 per cent equity in the project.

Since,lignite in contrast to coal has a high sulphur content. Kishore said the company would be using circulating fluidised bed combustion technology for generating power.

The technology would include mixing limestone with lignite in a boiler. Limestone with sulphur comes out as gypsum while the remaining product is used for power generation.