The biggest collateral damage in the witch-hunt against undeserving firms that were allocated coal blocks by the UPA is that some deserving candidates could find themselves facing the short end of the stick if the government were to succumb to the growing clamour for en-masse cancellations.
It needs to be borne in mind that along with a number of completely unknown firms that managed to get hold of the blocks on offer, state-owned power generation firm NTPC Ltd had figured in a list of six public sector undertakings that had their blocks cancelled last year for being slack in developing the fields.
Now by all standards, NTPC is a serious player, considering that it’s the country’s biggest power generator with coal-fired projects making up about 85 per cent of its commercial capacity of 39,174 MW. At the time that the allocations were cancelled, NTPC had already spent Rs 175 crore for developing these blocks. Plus, the firm has been grappling with a shortage of coal that has progressively worsened by the day. During fiscal 2011-12, dwindling coal supplies from CIL forced NTPC to step up imports to the tune of 13 per cent (at 12.003 million tonnes), which resulted in high power generation costs that cash-strapped distribution utilities were reluctant to buy. Not surprising then that the NTPC stock, in the 12-months since May 2011 has seen Rs 1,510 crore in market cap being shaved off, in part due to the fuel supply uncertainties. The loss for NTPC shareholders is the collateral damage from the unfolding coal mess.
So in pure commercial terms, it made little sense for NTPC to squat on the blocks it was handed six years back. But the fact remains that most of these mines that were offered to new players such as NTPC and private sector players for captive mining simply because Coal India Ltd was not interested in these as a majority were in virgin forests or in Naxal territory, making them extremely difficult to mine — something that companies such as NTPC found out in due course. No surprises then that eight years after they were first allocated, only two out of the 57 blocks awarded to private players has come into production. While conceding that the government did bend rules to accommodate rank outsiders in the steel and power sectors, there is an equally compelling reason to distinguish the serious players