Date:03/05/2005 URL: http://www.thehindubusinessline.com/2005/05/03/stories/2005050301481700.htm

Back Damodar Valley gets captive coal linkage

Pratim Ranjan Bose

DVC has been quick to get off the mark and has formed a joint venture with EMTA Ltd for carrying out mining activities. The corporation will hold a minority 26 per cent stake in the joint venture and will buy back the entire production for captive use.

Kolkata , May 2

FIFTY years after its inception, Damodar Valley Corporation has finally been offered captive coal linkage by the Centre.

The Government recently awarded the lease of three blocks with a combined reserve of 150 million tonnes of coal, currently under Eastern Coalfields and Central Coalfields, to DVC for captive consumption at the corporation's biggest thermal power plant at Mejia (840 mw) and the proposed 1,000-mw greenfield venture at Durgapur.

The Mejia thermal power station is due for a 500-mw capacity expansion in the 11th Plan period.

Currently, the corporation holds a small reserve at Bermo, which was obtained through the acquisition of a thermal power facility of Bokaro Steel in the 1950's. The reserve has almost been exhausted and it produces a maximum of 3.5 million tonnes coal, against the existing requirement of six million tonnes. The requirement will go up to 15 million tonnes once Mejia goes into expansion and the Durgapur Steel power station is commissioned.

Till recently, DVC had never been serious about having a captive coal linkage. It finally woke up when the generation plans regarding its best performer, the Mejia thermal station, was hit by a coal crisis in mid-2004. Since then, Mejia has had to undergo partial shutdown on many occasions due to coal shortage. In fact, the overall coal stock has never been for more than seven days.

DVC has been quick to get off the mark and has formed a joint venture with EMTA Ltd for carrying out mining activities. The corporation will hold a minority 26-per cent stake in the joint venture and will buy back the entire production of the mines for captive use.

While the agreement is already in place, the name of the joint venture and its capital structure will be decided in a few weeks, sources said, adding that the project for development of the mine and production will commence shortly.

EMTA has entered into a joint venture (Bengal Emta Coal Mines Ltd) with the West Bengal State Electricity Board and the West Bengal Power Development Corporation Ltd for carrying out captive mining activities. EMTA holds a 74-per cent stake in this joint venture.