To free $80 bn coal reserves,NTPC may relocate North Karanpura project: Panel

Given the volatility in global coal prices,the loss could be as high as $70-80 billion

Written by Priyadarshi Siddhanta | New Delhi | Published: February 27, 2012 1:19 am

A panel chaired by Planning Commission member BK Chaturvedi that was set up by the Group of Ministers last September has recommended that state-owned electricity giant NTPC may consider relocating its 3×660 mega watt North Karanpura project in Jharkhand since it would otherwise block six billion tonnes coal reserves perpetually. Given the volatility in global coal prices,the loss could be as high as $70-80 billion,the panel noted. 

NTPC had in 2001 proposed to set up a 3×660 MW power generation project at North Karanpura at an expenditure of nearly Rs 12,000 crore. It secured all statutory clearances,and has so far spent Rs 74 crore on initial construction and another Rs 150 crore on oustees to seek physical possession of 1,500 acres of land for the project. It also tied up with Japan International Cooperation Agency,duly backed by government’s sovereign guarantees.

In 2003,based on the updated geological data,maharatna miner Coal India Ltd (CIL) and Central Mine Planning and Design Institute informed NTPC that underneath its project site lied an estimated coal reserves of six billion tonnes,which the nation cannot afford to lose. NTPC refused to budge and the power ministry shot down CIL’s suggestion to re-locate the project. 

The power and coal ministries — representing NTPC and CIL,respectively — got embroiled in the war between the two maharatnas. The matter finally reached the group of ministers chaired by Finance Minister Pranab Mukherjee on September 20,2011. The GoM formed a three-member panel headed by Chaturvedi to iron out the differences. The other two members were coal secretary Alok Perti and his power ministry counterpart P Uma Shankar.

As it turns out,the panel has not made any clear cut recommendations on the course of action. The four options for NTPC explored by the panel were: i) abandon the project,ii) give up mining reserves fully,iii) re-locate to Patratu or Tenughat,areas in proximity to coal mines in Jharkhand,but hand over the site to CIL for exploration, and iv) go ahead at the current site in North Karanpura with adequate safeguards. The panel rejected the first two options,stating they were ‘sub-optimal’.

Chaturvedi is learnt to have suggested that NTPC can try its luck by scrapping some existing outdated capacities at Patratu and Tenughat and build a plant based on super critical technology. If there is a consensus that NTPC can re-locate elsewhere,CIL can be mandated to compensate NTPC by paying Rs 250 crore already invested by it. If there is no consensus,NTPC can be allowed to continue at North Karanpura for 25-30 years and thereafter hand over the site to CIL for unlocking the reserves. 

Coal Secretary Alok Perti has,however,shot down the suggestion of NTPC continuing at North Karanpura stating that the economic value of coal reserves are worth between $87.5 billion and $540 billion. The best solution would be to re-locate NTPC project as suggested by Plan Panel Deputy Chairman Montek Singh Ahluwalia and Home Minister P Chidambaram,said Perti.

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