Date:08/11/2007 URL: http://www.thehindu.com/2007/11/08/stories/2007110856551700.htm

Business

Two coal blocks offered to 6 firms

Special Correspondent

Reliance Energy, GMR figure

NEW DELHI: The Union Government on Wednesday offered to jointly allocate two coal blocks in Orissa to six companies, including Reliance Energy Limited (REL) and GMR, for meeting the fuel requirements of their proposed power plants.

The Coal Ministry has offered Rampia and dip side of Rampia blocks with gross reserves of 645 million tonnes to the six companies, which also include Sterlite Energy, Mittal Steel, the Lanco Group and Navbharat Power Private Limited. All the companies have been asked to submit a mutually acceptable agreement within a month to the Ministry, which will take a final decision thereafter, according to sources.

The sources said the two coal blocks would be sufficient to meet the requirements of power plants with a total generating capacity of 5,750 MW. This includes five 1,000 MW power plants by all the companies except Mittal Steel, whose captive power plant is proposed to have a generating capacity of 750 MW. The Ministry has suggested various options to the companies for preparing an agreement to mine coal from the blocks. Under the first option, mining could be carried out by a consortium of two or more companies in any given block by constituting a special purpose vehicle (SPV).

As per the second option, one company could be designated as the leader for the block and other firms would be termed as the associates for that block. Mining lease would be allocated to the leader and production from the mine will be shared between all the six companies.

Under the third option, one company could be chosen as the leader and other firms as associates. The mining lease of each block would be given to the designated leader who would make the investment and carry out mining operations.