Thiess, Singareni in race for $2.2 billion NTPC contract

Five companies including Leighton Holdings' unit Thiess Minecs India Pvt Ltd and Singareni Collieries Co Ltd have expressed interest in developing and operating NTPC Ltd's Chatti Bariatu coal mine in Jharkhand for a contract worth some $2.2 billion (`9,922 crore).

The firms have submitted price bids to develop and operate the Chatti Bariatu mine from which 148.68 million tonnes (mt) of the fuel can be extracted.
India's largest power utility wants to develop its own coal mines to secure supplies and reduce dependence on Coal India Ltd (CIL), its primary coal supplier, but plans have been delayed due to procedural and infrastructure problems.
A Thiess spokesperson declined comment. Singareni Collieries couldn't be immediately contacted.

“After Chatti Bariatu, we plan to award Kerandari,” said an NTPC executive, requesting anonymity.

The environment ministry has denied NTPC approval to build a railway line between Hazaribagh and Shivpur through Banadag that poses problems in transporting the coal it expects to mine.

The utility has earlier awarded Thiess a contract to develop and operate its Pakri Barwadih mine that has 503mt mineable reserves and is valued at $5.5 billion. The mine is yet to be operationalized.

“There is some issue with the railway line evacuation,” said another NTPC executive, who also declined to be named.

The government has allotted seven coal mines to NTPC, which include Chatti Bariatu South (400mt gross reserves), Kerandari (142mt mineable reserves), Dulanga (194mt mineable reserves), Talaipalli (843mt mineable reserves) and Chichro Patsimal (2,000mt gross reserves). Coal is critical for NTPC because more than 80% of its installed capacity is fuelled by it. The firm, which has a power generation capacity of 33,194 megawatt (MW), plans to increase its installed capacity to 75,000MW by 2017.

The utility has a coal requirement of 160mt in fiscal 2012, of which around 16mt will be imported. The captive coal mines allocated to various firms are yet to begin mining. Only 26 captive blocks of 208 are in operation.

CIL is to supply 144mt, with the utility already placing order for 12mt of imported coal. CIL, which has an 82% share of the country's coal production, has been unable to keep pace with rising demand. It produced 431.27mt in 2009-10 against a target of 435mt.

India has a known gross resource base of 264,000mt, the fourth largest in the world, of which proven reserves are around 101,000mt. Demand is around 600 million tonnes per annum (mtpa) and set to touch 2,340mtpa by 2030. However, Indian coal is of low quality with high ash content.

According to the Economic Survey 2010, power generation decreased to 4.5% between April and December from 6.17% in the same period in 2009. Shortage of coal was one reason for this.

While the country's most vital primary source of energy is quite abundant, but between extracting the coal and getting it to the power stations lies a range of hurdles, including environmental and law and order issues and lack of investment.
Key issues that plague the sector are delays in land acquisition for mining, tardy forest clearances, the absence of a regulator for the industry and inefficient mining.

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