Posts Tagged ‘coal mining in Orissa’

Private Firms Filling Their Coffers with Black Gold in Mineral Rich Orissa

The Comptroller and Auditor General (CAG) of India came down heavily on the Orissa government for incurring a staggering loss of 932.32 crore loss owing to administrative callousness as well as irregularities by the officials. Citing gross anomalies in allotment of land to private companies, the report slammed the government for not adhering to the industrial policy of 2001.

Coal Loot in orissa

Coal Loot in orissa

The report clearly points that the policy of captive blocks formulated by the state government has created ample opportunity for a veritable cross-section of corporate India to grab the dwindling natural resource for a song and make undue profits at the cost of consumers. Fingers are regularly pointed at  corporate like , Jindal Power, ), Essar Power and Reliance Power for having taken undue gains from the captive coal mines in orissa

Jindal Power owns captive coal reserves of 50 million tonnes per annum (mmtpa), which is enough to fire as much as 12,000 MW generation capacity. Cost of coal available from captive mines is much lower compared to the price charged by Coal India. But the policy hardly enures that the company will share the benefits of low fuel cost with consumers when it starts supplying power from upcoming power projects in Chhattisgarh, Jharkhand and Orissa.

Jindal Power has been allocated captive coal mines to meet fuel requirement of its 1,000 MW Tanmar power plant in the Raigarh district of Chhattisgarh. But the developer is selling entire power from the plant in the free market, which fetches a much higher price that what might be allowed under the power purchase agreement, where tariff are set by the regulator.

The company has been selling power at over R5 a unit during peak hours in the open market though its fuel cost is estimated at just R0.45 a unit. In comparison, the price discovered for similar power projects awarded under tariff based bidding has been in the range of R1.5 a unit. So, its return on equity is over 100% compared to the industry norm of 15.5%.

The private developer has allocated 170 MW power to the Chhattisgarh state at a variable cost as a quid pro quo for its support to the project. So, there is little chance of the home state starting penal proceedings against the developer.

Other power companies like Essar Power and Reliance Power too have “unduly benefited” from the captive coal policy that is at odds with the spirit of the Electricity Act which aims to rationalise tariffs through competition.

Essar Power has contracted power supply to Bihar at R3.26 a unit, the rate set by the regulator although its coal costs from captive mines might not justify the tariff. Reliance Power, which has quoted levelised tariff of R1.19 a unit for the Sasan ultra mega power project, will supply power from the nearby Chitrangi power project at R2.45 a unit, though the coal source for both the projects is the same.

Apart from the revenue loss that the government is incurring owing to  unwarranted support to its policy of  industrialization, there has been a visible loss of arable and forest  land in the state which is being continually lost to the industries. The CAG report has also been categorical in pointing this aspect too. The government reportedly  gave away land arbitarilly for industrialization purposes in the last decade. It is stated in the report that a total 1,20,142 acers of land  was allotted to 199 entities out of 208 companies who together applied for 1,30,677 acres of land between 1995-2011.

With the report, it is now obvious now that in its willingness to take Orissa to the next stage in development path, the government has taken a heavy toll on the people and exchequer, the implications of which will be carried forwarded even to the coming generations.