Govt, Coal India working at cross-purposes

It is not common for the government to issue a Presidential order, forcing Coal India to sign fuel pacts with power producers. Now, the board of directors of CIL has created a chapter in the history of corporate governance in government-owned companies in India. It has effectively ensured that the company does not pay for the decisions taken by its promoter.

Taking a cue from the Presidential order that allows the company to decide on the penalty to be imposed, the CIL board has set penal provisions, in the event of failure to honour the supply pacts, at ridiculously low levels. Back of the envelope calculations show that even if the company cannot provide for the minimum requirement of 69 million tonnes of coal against the new FSAs to be signed, it will end up paying a total penalty of approximately Rs 1 crore annually.

SHAREHOLDER INTEREST

Consider a Rs. 50,000 crore balance sheet and you know how much that penalty matters to CIL. The decision is largely credited to the independent directors. There was no way that the board could override their view, as independent directors comprise 50 per cent of board.

The developments reaffirm the importance of issues raised by The Children's Investment Fund Management (TCI), UK, which are wholly directed at enhancing shareholder value — especially that of minority shareholders, who invest their hard earned money in government-owned companies, and then haplessly watch the government compromising the interest of these companies.

The government is unaffected as it collects its share of taxes and, even forces such PSUs to fork out huge dividends, all of which have a questionable impact on the market value of stocks. PSU oil stocks are a perfect case in point, on how minority investor's interest is compromised by the government. And, one may wonder why independent directors on board of these companies are not equally assertive. But that is just one way of looking into the issue.

So far, the Union Government has failed miserably in taking care of wider issues that throttle the growth of the mining sector, under public or private ownership.

Though the National Coal Distribution Policy (NCDP), declared by UPA-I, wanted the Railways to give an undertaking on delivery of coal, the government did not implement it. Politics seems to ensure that different arms of the same government operate in isolation.

CIL was created because government wanted to keep commercial coal production its exclusive domain. It, therefore, follows that the government is responsible for for failing to increase coal production in the country.

EVADING RESPONSIBILITY

Seen in this perspective, the Presidential order was just another way of passing the buck on a company, which was so far pandering to the whims and fancies of the same government.

The intention was questionable, and the CIL board, rightly or wrongly, responded to the directive by expressing its intention to supply coal, but denied accepting full responsibility for the cause.

Just as the government did not spell out how CIL's interests are protected, the independent directors ensured CIL's immediate financial interests are protected, without much regard for the cause of power generation.

It is widely anticipated that the unprecedented board action may now be countered by another directive from the government. The government should now adopt a more holistic approach to the development of the coal sector.

No Free Mines with UMPPs Anymore

Coal ministry finalising norms for calculating the reserve price for the mines, bidding norms and a model agreement

Bidders for upcoming ultra mega power plants in Odisha and Chattisgarh will have to pay a reserve price to the state government for coal mines that come bundled with the project, ending a long established policy regime in which the mines were allotted free. The coal ministry is in the process of finalizing norms for calculating the reserve price for the mines, bidding norms and a model agreement for which it has received expression of interest from consultants, coal secretary Alok Perti said. The ministry plans to finalize these guidelines by September this year.

The new norms will change the economics of large power projects known as ultra mega power projects as they have till now been awarded based on the electricity tariff, while the mines came free. The coal ministry has been working on a series of policy initiatives to ensure transparency in allocation of coal blocks, particularly to industries like steel and power which are eligible for captive mines. Earlier, blocks were nominated to projects keeping in mind fuel requirement and its location. However, this has been discontinued and the government will now give blocks on captive basis only through the auction route, Mr Petri said.

The decision to charge for the mines comes in the backdrop of the recent controversy over allocation of spectrum in the telecom sector in 2008 at prices fixed in 2001 and a controversy stirred by a leaked draft report of the Comptroller and Auditor General (CAG) over alleged losses incurred by government in giving out mines. The CAG had reportedly alleged that private companies, who had been allotted coal blocks without bidding, might have made windfall gains at the cost of government-owned Coal India.

The supreme court judgment in the 2G case is very clear on how natural resources are to be given out and exploited.We had already adopted some of these measures in the auctioning rules and it will borne in mind for all further allocation, the coal secretary said.ET had earlier reported that the coal ministry has identified 54 coal blocks that would be given out for mining. Apart from selected industries, mines would also be allotted to state-run mining companies, he said.

On the recent controversy over coal allocation to power projects by CIL where the government had to resort to a presidential decree to force the public sector company to fal in line, the secretary said that it was unfortunate. The MOU and risk factors mentioned in the RHP is well documented and a public sector organization has to abide by those norms. It was known to the independent directors as well, he said.

Can Coal India increase production sufficiently?

Experts say supply problems can also be addressed through improved logistics and higher allocation to efficient plants

With the initial heat and dust around Coal India Ltd’s (CIL) fuel supply agreements (FSAs) having settled, experts are now saying these are unlikely to improve the situation dramatically. For starters, there is no clarity on how much of the 80 per cent coal supply guaranteed would be imported, given the huge price differential between domestic ($20/tonne) and imported ($100/tonne) prices.

Analysts believe the 12th Plan would target a seven per cent increase in production for CIL. Explains Arun Kumar Singh, senior analyst at HSBC Securities and Capital Markets: “If this target is achieved, production would increase from 435 mt in FY12 to 615 mt by FY17. We are estimating a production of 560 mt in FY17. Further, stringent monitoring of production from captive mines is expected.”

CIL’s production has stagnated at 435 million tonnes. The annual Production growth is usually not more than five per cent. Analysts say even if CIL increases production by 30 mt each year, it would go a long way in resolving the problem.

Power sector players and experts believe a lot of supply problems can be addressed through improved logistics and higher allocation to efficient plants. There are multiple options, based on the current rules/policies and aided by the new FSA directive that stipulates a minimum supply of 80 per cent. According to Edelweiss Securities: “These include economical coal transportation, higher allocation to efficient plants and price pooling among similar grade users. These steps would translate into savings from rail freight and economies of scale, which would help reduce the impact from inevitable coal imports.”

While CIL has been asked to sign FSAs, analysts say a similar directive should have been given to the railways ministry to complete projects providing connectivity between mines and power plants.

Geological surprises, delays drive up hydro power tariffs

The notion that hydro power is cheaper than thermal power is proving to be a fallacy. An FE analysis of the tariffs of some of the country’s largest hydro stations has revealed that they generate electricity at a cost much higher than most thermal plants.

Thermal stations using domestic coal generate electricity at less than half the cost of some hydro stations like GVK Group’s 330MW project at Alaknanda in Uttarakhand. Even plants using use costlier fuels like imported coal and LNG generate electricity at costs significantly below many hydro projects (see table).

In most cases, hydro power has become expensive due to geological surprises and the consequent rise in capital expenditure. Environmental issues have also resulted in cost escalation of many hydro projects.

Undue project delays and cost escalation have made electricity from several hydroelectric projects unaffordable. Since developers are allowed to recover extra cost incurred on implementation of these projects under the prevailing dispensation, consumers have to bear the burden of cost escalation.

Apart from GVK’s Alaknanda project, Baglihar, Dulhasti, Subansiri Lower, Parvati-II and Sewa-II are some of the other hydroelectric projects facing sharp cost escalation due to subsequent changes in equipment design necessitated by geological surprises.

Both PSUs and private players score poorly when it comes to managing cost escalation risks relating to implementation of hydro power projects. While developers mostly blame geological surprises for cost overruns, regulators have little choice but to approve the claims. Discoms cannot refuse to buy costly power after signing power purchase agreement with developers.

“Geological and hydrological surprises faced during construction lead to time and cost overruns for hydro power projects,” said former Union power secretary RV Shahi.

At GVK's under-construction Alaknanda project, project cost is estimated to go up from the originally estimated Rs 1,978 crore to Rs 4,192 crore due to a two-year delay in project completion. As result, tariff for the project is estimated to go up to Rs 6.23 a unit from Rs 2.80 a unit. The increase is expected to strain the finances of the UP Power Development Corporation, which is contractually bound to buy 88% power from the project. The discom is already reeling under debt. The project was conceptualised in 1985 before Uttarakhand was carved out of Uttar Pradesh. Uttarakhand is entitled to 12% free power from the project as the home state.

Since then, the state electricity regulator has twice approved cost escalation for the project – Rs 720 crore in 2008 and Rs 977 crore in 2011. The developer has again approached the regulator for approval to fresh cost escalation, which will take project cost to Rs 4,192 crore and tariff to Rs 6.23 a unit. The developer has promised to commission the project in May 2013. The projected was initially scheduled for commissioning in July 2011, with tariff envisaged at Rs 2.80 a unit.

“The ministry of environment imposed Section 5 (of the Environment Protection Act) in May 2011 restraining us from taking up construction work other than safety and electricity related work of the project, resulting in time overrun which in turn led to increase in cost,” GVK clarified to FE.

Similarly, the cost estimate of NHPC's 2,000 MW Subansiri Lower project in Arunachal Pradesh has increased to Rs 11,000 crore from the initial Rs 6,200 crore due to delay in project implementation, caused by environmental hurdles. Tariff is projected to rise to Rs 3.64 a unit from Rs 1.86 a unit envisaged for the project.

‘Gujarat has attracted Rs 8,000 cr investment in solar energy'

Over the last decade, Gujarat has emerged a power-surplus State and carried electricity to nearly all of its 18,000 villages through the Jyotigram Yojana.

Most of its areas now have a round-the-clock electricity supply. Its biggest cities such as Ahmedabad and Surat are lighted by the private sector and its state electricity board had come out of the red in 2006. Clearly, electricity availability and reforms in power sector have gone a long way in making the Gujarat miracle.

Mr D.J. Pandian, Principal Secretary (Energy), has been one of the architects of this phenomenon. Known in the business circles as Gujarat's “Energy Czar”, he is the man behind the State's energy projects. He also nursed the Pandit Deendayal Petroleum University, Gandhinagar, when he headed the GSPC Group.

Here, he speaks to Business Line on how solar energy has arrived in Gujarat. Excerpts:

What are the installed capacity and current production of thermal energy in Gujarat?

We have an installed capacity of 13,500 MW and now produce 11,000 MW.

How does the per megawatt installation costs differ in solar and thermal energy?

Our installed solar energy capacity is 604.8 MW, that includes 214 MW at the Solar Park in Patan and 390 MW in other districts. While thermal power plants come at Rs 3.5 crore (gas-based) to Rs 5 crore (coal-based) per mw, solar plants are installed at Rs 10-11 crore per MW of capital cost. But the solar plants have no variable costs as they require to bear no fuel costs thereafter. Also, we can now sell both gas-based and solar-based power at Rs 7-8 per unit, but the latter is free of the uncertainties of gas-availability and, in the long term, more dependable and cheaper.

How much investment has Gujarat, which now produces two-thirds of solar power in India, attracted in the development of solar power?

Nearly Rs 8,000 crore. And we hope to do more with further development of solar power in the Patan complex and elsewhere.

What is the USP of this park?

We have so far acquired 3,000 acres of government land for the development of 214 MW of solar power by different companies, which were allotted 250 MW capacity in 2008. The solar power capacity at Patan is estimated at 500 MW. We are now trying to acquire some private land as well to achieve this capacity.

In view of the availability of mainly wasteland, is Gujarat planning to add another solar power park in the near future?

Yes, we have identified some land in Banaskantha district as well and, hopefully, we would soon take a decision.

Gujarat planning rooftop solar power policy for households: Modi

Gujarat, which is bathed in the sun’s rays for most part of the year, is considering coming up with a “rooftop” solar power plant policy to enable the people to produce their own electricity and earn money by selling surplus power to the grid, the Chief Minister, Mr Narendra Modi, said here on Thursday.

Gandhinagar, being developed as India’s first model solar city, already has solar rooftop systems ranging from 1 kilowatt (kW) to 150 kW at more than 150 locations, aggregating to a capacity of 1.39 MW. These cover a total of two acres of roof-top area, providing 1 per cent of the total energy consumption in the State capital. Also, the new building of the Gujarat Pollution Control Board (GPCB) is completely powered by solar energy.

Recently, the State Government floated a 5 MW rooftop programme on the PPP model in the capital, which is now being extended to five more cities and towns.

After dedicating to the nation an ambitious 605 MW solar power project spread across 10 districts, he said the policy would make the people self-reliant in power generation. Also, this would help them rent out their roofs for such plants and earn extra income to improve their living standards. The solar project has created an additional 30,000 jobs in the State.

The Gujarat Solar Park, set up with an investment of nearly Rs 9,000 crore on a 2,669 acre plot of wasteland in village Charanka in Patan district, is the largest part of the State’s power project with 214 MW of operational capacity, developed at a single location by private companies. The overall capacity of the Solar Park, when it expands to 5,000 acres, would be 500 MW, making it the largest solar farm in Asia.

The entire solar power project would produce 30 lakh units of clean energy daily, capable of electrifying 10 lakh households, and save 10 lakh tonnes equivalent of carbon dioxide emissions annually.

He said technology has reduced the cost of solar power production from Rs 15 to Rs 8.5 per unit in the last few years, making it affordable and on a par with gas-based power. Between 2001 and 2012, Gujarat increased its installed and under-development power generation capacity from 7,000 MW to 18,000 MW.

The US Consul-General in India, Mr Peter Haas, said his country had committed $500 million to the State for development of renewable sources of energy.

The State-promoted Gujarat Power Corporation Ltd (GPCL), nodal agency for implementation of the Solar Park, has invested Rs 300 crore in creating infrastructure while Gujarat Energy Transmission Corporation

Ltd (GETCO) has invested Rs 650 crore on an evacuation and transmission network, for which The Asian Development Bank (ADB) has extended a loan of Rs 500 crore to GETCO. For the proposed second Solar Park in the State, ADB would provide loan of $500 million.

Getting coal pricing right

In response to a query from the power ministry, an organisation shepherding a major use of coal, the coal ministry has reportedly ‘expressed its helplessness in giving the exact cost of production of coal from different blocks in the coal industry’ (Financial Express, April 9). This is also seen as a rebuff to the recent leaked CAG draft report. For a ministry that is the public interface of a major PSU undertaking, this is a extraordinary confession, if true.

The coal ministry has correctly stated that that geo-mining conditions, such as the size of the property, seam thickness, mineable reserves, whether the area is geologically disturbed and also the method of extraction of coal (open cast or underground mine), stripping ratio and kind of mechanisation, are the main cost determinants. It has also correctly stated that the nature and surface feature of land, the amount of rehabilitation and resettlement work and availability of infrastructure near the project site also alter costs. This second set of factors is easily measurable and hence can be disposed of at the outset.

The whole concept of an arms length relationship between a PSU and a ministry can be operationalised only if cost estimates are possible, as I remember from the PSU reform committees I worked in or chaired in the days of my youth as a public sector pricing czar. The power ministry was asking for this data according to the FE report for loading it on to the bid documents of private power projects. A bidder private manager is reportedly to have gleefully noted all this. The upshot is that while the factors the coal ministry has stated were present always for geology, the Government of India had done pioneering work on the estimation of coal mining costs and these reports are all in the public domain.

In my first job in the government in 1974, coal had been nationalised by the late Mohan Kumaramangalam and he had horrid stories of the coal mining companies, largely MNCs, exploiting nature and the economy and for almost a decade. Coal production was near constant before nationalisation. Coal India, NTPC and so on, were set up and Indian coal production went up in quantum jumps and was the reason India efficiently faced the first energy crisis for coal-substituted imported crude.

Coal pricing became an issue and the usual arguments—“we can’t do it!”—were toted out. Asked to price coal when I was BICP chief, we looked at what the big coal mining boys in the world were doing. It turned out the econometrics of coal mining costs had come of age. The Institute of Economic Growth’s Planning Unit knew it and so did the Institute of Mines at Dhanbad. But, of course, our politicians and bureaucrats don’t like domestic knowledge institutions.

Professor Gopal Kadekodi at the IEG estimated these models for the BICP and the factors he took into account with mine level data were seam thickness, depth, gradient, over-burden ratio, total dumper hours, scale of output, number of dumpers, man shifts, number of faces, and haulage distance. This was published in an IEG working paper in 1988. G Kadekodi and A Sharma estimated cost elasticities as these factors varied and so standard cost functions were available. I quoted him extensively in a book I wrote on Indian Development Planning and Policy published by World Institute of Development Economic Research at Helsinki. It met the market test and the second reprint is still around, so it can be easily read. Kadekodi is still around, and I am sure could guide work at Dharwad. Apart from settling the fate of future scams, this kind of work is important for the nation to pay the price of the real cost of its natural endowments. Coal India might want more of open cast mining, but prudence may need us to go down and that cost has to be paid. The point that Jairam Ramesh was making as environment minister, that the real costs of coal mining include environmental and rehab costs, is correct. These costs have to be paid. My argument is that this is scientifically doable.

A few years ago, at a TERI meeting on sustainable energy and water policies, the then adviser, energy in the Planning Commission was at length lamenting how the available coal pricing models everybody was using were wrong. When I told him that fact-based exercises were available and only needed updating, he said “sir, nobody does that kind of work anymore”. I don’t believe this, for it violates a basic Alagh Law that the next generation is smarter than mine. We only need to lead them there.

CIL board divided on FSA scope, agrees to abide by presidential directive

Coal India's board remains divided over fuel supply agreements (FSAs) with private power producers for plants being commissioned after December 2011 although its has agreed to abide by the Presidential Directive to sign agreements with older plants, company sources said.

In its meeting last week, discussions about plants being commissioned from December 2011 to March 2015, and possible imports to meet any shortfall led to a lengthy debate that could not be resolved, a director in the company said.

"We will need to see how this FSA goes with the power companies. Following this we will decide whether a new FSA will be required for other power plants or the existing one will suffice," a CIL official said.

The director said that after successive meetings and stiff resistance from the independent directors, the board could not take a decision about committing fuel to new power plants.

"At the board meeting of April 16, there was no decision on supplying coal to power plants that has come up between December 2011 and now; or plants that are to come up till March 2015. There was stiff resistance from a few independent directors even after the Presidential Directive which forced the board to decide only on signing FSAs for new plants between April 2009 and December 2011 only," a senior CIL director told ET.

The Presidential Decree had directed CIL to abide by the instruction of the prime minister's office and sign FSAs in 15 days with companies that had set up plants by the end of last year. The PMO's directive said: "CIL will sign FSAs with power plants that have entered into long term PPAs with discoms, and have been commissioned/would get commissioned after Match 31, 2009 and on or before after March 31, 2015."

"The PMO's directive also mentioned that CIL will have to sign FSAs before March 31, 2012 for plants that have been commissioned up to December 2011. The present FSA has been formulated to include these plants only," the director said.

Coal India will require about 64 MT of additional coal to honour the FSA commitments for plants that has been commissioned till December 2011. Nevertheless, the board has estimated that there will not be any requirement for coal imports in the first two years. This is based on the calculation that production will rise by 30 MT during 2012-13, and stocks of 72 MT.

However, officials believe it may not be easy for the company to increase production by 30 MT in a single year and liquidate bulk of the stock position. "The company is most likely to see shortfall in supply position requiring imports," he said.

"Not being certain about the implications of imports they have not been able to arrive any decisions on the import front," the official said.

Following the meeting on April 16, Zohra Chatterji, acting chairman, Coal India had said: The issue (coal imports) will be discussed at a separate meeting at a later date depending on the requirement. However, this meeting has not taken any decision with respect to imports and the various options that CIL was playing with."

Coal output is key to energy security

There is no alternative to developing more domestic coal mines, despite the difficulties involved. Imports are not sustainable.

To maintain India's growth, it is imperative that energy is readily available and is affordable. According to the Ministry of Coal, the gap in demand and domestic supply of coal has increased to 83 million tonnes (MT) in 2010-11 from about 50 MT in 2007-08.

With the shortage of coal, generation in different power plants is getting affected. As many as 18 power plants in the country are facing critical levels of coal shortage. Power utilities have already reported a generation loss of 8.7 billion units in 2011-12 (up to February 2012) due to shortage of coal. By the end of the 12th Plan (2012- 2017), which envisages the development of coal-based power plants, the projected gap between demand and supply is likely to reach a colossal 200 MT.

Buying coal from abroad to meet the demand deficit may make sense on paper but the very prospect of importing coal in today's circumstances is giving sleepless nights to many power producers. Traditionally, India has been sourcing its coal from Indonesia and Australia. The coal import scenario has drastically changed in recent times; while the steep carbon tax in Australia at 30 per cent has made coal imports unviable, Indonesia poses significant political and legal risks in the form of the changing regulatory framework for coal imports. The price of coal imports from Indonesia has already increased phenomenally after the local government's fixed coal prices. A further revision may be on the cards since the Indonesian government is considering imposing fresh taxes.

The situation on LNG is no better. The absence of new gas finds and declining production from Krishna-Godavari-D6 field is pushing the need for enhanced gas imports.

FUEL AVAILABILITY

Union Petroleum ministry data suggests that LNG imports in 2012-13 is expected to be at 69 million standard cubic metres per day (MSCMD), well over twice the quantity last year. From there on, the imports are expected to increase over 2.5 times to 184 MSCMD in 2016-17.

While a combination of high import levels and volatile international prices threatens to destabilise the financial structure of Indian coal and/or LNG-dependent energy companies, many States and their associated regulatory commissions are not reconciled to the twin facts about coal and LNG supplies. They refuse to believe that the country's coal production is in deficit and imports have been increasing each successive year. They also fail to acknowledge that gas supplies from domestic sources are dwindling and the gap would have to be met from expensive imported LNG. Since, power is a concurrent subject, these entities wish to avoid sourcing electricity based on imported fuels. However, avoidance is a temporary reprieve and cannot be sustained for long.

The question is: Can India do without energy? The answer is an emphatic “No” since energy is universally recognised as one of the most important inputs for economic growth and GDP. Economists say the growth of an economy hinges on the reliable availability of cost-effective and environmentally benign energy sources invulnerable to short- or long-term disruptions. India is no exception to this rule.

SUPPLY AGREEMENTS

It is estimated that in order to sustain a 7.6 per cent GDP growth, as per the Finance Minister's Budget announcement, India would need the power sector to grow by 9 per cent. The Central Government and the Planning Commission have also made necessary announcements about setting up approximately an additional 76,000 MW of power generation facilities.

However, simply setting up additional capacities without tying up the fuel requirements for the same is fraught with risks. The Government is well-aware of the problems faced by some of the UMPP projects and the ever-escalating import price of coal and gas. The need of the hour, therefore, is to immediately evolve a long-term National Energy Security Policy.

In its Energy Security Policy, the Centre must consider mediating and help resolve the pending fuel supply agreements for long-term fuel linkages in India and abroad. Mining of domestic coal must be accorded the highest priority. In fact, the Government should set up a single window inter-ministerial body for facilitating fast track clearances of coal mining projects.

The Government should also consider issuing guidelines on power tariff using bulk sourcing of both imported and domestic fuels. There is an urgent need for the government to fully liberalise the coal business and for Coal India Ltd to step up domestic production, as well as acquire coal mining companies abroad, if necessary.

Concurrently, the Government should introduce an independent coal regulator to oversee mine planning and development. The regulator and the Energy Security Policy would together create a conducive and enabling framework which would ensure adherence to investment plans and production schedules to build a road map for commercial mining.

COAL OUTPUT

In India, there are multiple unexplored coal blocks where energy companies – government-owned and private – can apply for captive mining. However, the inherent challenges are huge and can deter companies from applying. Even in areas which are known to have coal deposits, the distribution of minerals is often uneven and varies drastically from one region to another. Also, a large part of India's coal reserves may not be extractable with current mining technologies.

These problems are compounded by delays in approval of investments in the mining sector, infrastructure impediments, the often contentious issue of large scale displacement of tribal population, resistance of locals and environment issues.

These issues notwithstanding, as far as India is concerned, there is no alternative to developing more domestic coal mines.

While coal has been the mainstay for meeting more than half of India's commercial energy requirements, importing coal is simply not sustainable in the long run. Already, the world's coal reserves have dwindled to 4,200 BT from 10,000 BT over the last 25 years. Therefore, going forward, India's ability to import large quantities of coal will get increasingly restricted.

This is all the more reason as to why India should immediately adopt a National Energy Security Policy, look at removing the roadblocks and pave the path for ensuring long-term energy security.

Coal Ministry may issue notices to 58 firms this week

Last year, Ministry had scrapped coal blocks to 6 PSUs and 3 pvt firms for not developing them

The Coal Ministry is likely to begin this week the process of issuing show-cause notices to 58 captive coal block holders, including PSUs, which have not started the development work of mines in stipulated time.

"The coal ministry is likely to issue show-cause notices to 58 coal block holders, both in public and private sector, sitting idle on them this week," a top official in the coal ministry said.

"Coal Minister Sriprakash Jaiswal gave go-ahead to the proposal yesterday," the official said.

The decision to issue show-cause notices to the firms sitting idle on captive coal blocks was taken by a panel looking into the development of reserves, sources said.

Concerned over the increasing demand-supply gap, the Ministry in January this year had reviewed the progress of mines allocated to companies, including Tata Steel, Coal India, SAIL and NTPC for captive use.

The progress of the blocks allocated to Jindal Power, Jindal Steel & Power, Balco and MMTC was also reviewed during the two-day meeting.

Last year, the Coal Ministry had cancelled allotment of 14 coal and one lignite block to six PSUs, including NTPC, and three private firms for failing to develop them.

However, in January, the government gave back six coal blocks of the deallocated mines to firms, including Damodar Valley Corporation (DVC), Tenughat Vidyut Nigam Ltd and NTPC.