A coal mine at Talcher

Bhubaneswar, Sept. 24: The Supreme Court judgment cancelling 214 of the 218 coal blocks allotted since 1993 will hit the industrialisation in the state hard, almost crippling the growth of the power sector.

Sources said power, steel and sponge iron projects were likely to be hit most by the verdict. While the state government has signed as many as 49 MoUs in the steel sector, it has inked 28 agreements for generating around 36,000MW of power. The projects are now likely to face a coal crunch, which may force them to import coal that might make them unviable.

As many as 32 coal blocks have been allotted to various companies in the state, including some state and central public sector undertakings, since 1993. While seven of these were de-allocated at various points of time for failing to make satisfactory progress, the remaining 25 would now face the consequences of the apex court verdict, which, in what appears to be a small concession, has given active mines six months to wind up operations.

But, such mines would have to pay a fine of Rs 295 for every tonne of coal mined. As far as Odisha is concerned, of the 25 coal blocks, only Talabira-I allotted to aluminium major Hindalco in 1994 in the Ib Valley is operational.

However, almost all the companies, including the state-run PSUs such as the Odisha Mining Corporation and the Odisha Power Generation Corporation, which were allocated coal blocks in Talcher and Ib Valley, respectively, would feel frustrated. In the wake of the verdict, they would be unable to push their projects, mostly in the power sector. Private biggies such as Jindal Steel and Power Limited, Bhusan Steel and Strips Limited and Sterlite Energy Limited, who had bagged rights to mine coal from various reserves in the state, would also suffer.

The importance of coal linkage to state industries had been underscored by chief minister Naveen Patnaik in a letter to the then Union coal minister, Sriprakash Jaiswal, on January 10, 2012, when the issue of coal block allotment was just beginning to gain prominence.

Stating that the state government had signed MoUs with various companies to set up 29 power and 50 steel projects, Naveen had then said coal supply to these projects was essential. “Even for meeting 70 per cent of the coal requirement for the MoU-signed projects in the state, at least 7,000 million tonnes of coal reserves are required and need to be allocated,” the chief minister had said in his missive.

“The position of coal requirement for industries in the state remains more or less the same. Not only the power plants, but also the steel and sponge iron plants need coal. If the companies were allowed to work the 25 coal blocks in the state, industries would not face any problem. But, now a crisis may erupt,” said a government source.

The biggest jolt would be to the power sector as most of the coal blocks had been allocated for the purpose of power generation. Sources said the state government had signed MoUs worth Rs 2 lakh crore with various companies to set up plants to generate 36,000MW of power.

“The power sector will obviously suffer the most. And we should remember that electricity is something that even the common man needs on a daily basis,” said Ramesh Mohaptra, president of the Utkal Chamber of Commerce and Industry.