Maharashtra allotted coal block in Orissa

Maharashtra has been allotted a coal block by Coal India in Orissa to meet the state's ever increasing demand. The contract for the block in the Mahanadi basin is expected to be signed soon.

A senior official from the state energy ministry told Business Standard, "We expect to sign a memorandum of understanding with the coal ministry for the mining block called Mahanadi-Meghakat block soon."

The block is estimated to have more than 560 million tonne of coal deposits.

However, the benefits of the captive mine could be felt only in two years. "Even after we sign the MOU, it would take us another two years to start operations as we would require time to complete procedures such as land acquisition, environment clearances, tendering process for operations," the official pointed out.

MSEB plans to invite tenders for operating the mining. "As this is a specialised job and it is not our core competence, we would invite tenders for coal extraction from the Mahanadi-Meghakat block on our behalf. Whoever quotes the lowest would get the job," he said.

The state's current demand for coal is around 6.9 million tonne per year and 20 per cent of it is met through imported coal. After taking stock of a state's annual demand, coal ministry figures out how much coal can be supplied by domestic firms and remainder is imported. At present, the state power utility uses a 80:20 blend of Indian and imported coal.

The ministry official added, "Coal from this block would be used for capacity expansion at Chandrapur and Koradi. The Maharashtra State Electricity Generation Co (Mahagenco) has plans to erect additional power generation plant of 750 mw each at both these places."

Besides, there are plans to expand capacity at Parali, Khaparkheda and Paras by 250 mw each.

In this situation, the demand for coal is set to increase considerably. Owning a mine in Orissa will prove cost-effective for the state power utilities.

"Since the gap between demand and supply has increased by 700 mw in the last few days, we had to carry out load shedding for an extended period," the official said. At present, while state's total power production and supply from other sources add up to 9,000 mw, demand has gone up at 13,200 mw.