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Repeal of coal mine leases again; now Adani Power loses Jitpur block

The cancellations of the leases of these large mines cast a shadow over the prospects of the liberal policy regime put in place by the Modi government to attract private investments into the sector.

The Union coal ministry has decided to cancel the allotment of Jharkhand’s Jitpur coal mine to Adani Power as the company could not operationalise the mine on time. The Jitpur block was the first coal mine won by Adani Power in an auction, after submitting a closing bid of Rs 302 per tonne — payable to the state government — in March 2015.
Earlier, the ministry had de-allocated the Tokisud North and Ganeshpur mines in Jharkhand, which were with Essar Power and GMR Energy, respectively.

The cancellations of the leases of these large mines cast a shadow over the prospects of the liberal policy regime put in place by the Modi government to attract private investments into the sector.

The Jitpur coal block, when auctioned, had end-use restriction and could only be used in power production. Officials of the Jharkhand government said that the company intended to use the coal in its power plant in Mundra, Gujarat and it did not show any interest in operationalising the mine as it felt it was not economically viable to transport the coal from Jharkhand Godda district to the port city in the western state.

The coal mine development and production agreement shall terminated with effect from October 10, 2021, the coal ministry said in its notice. Adani Power had put its request to the Centre for surrendering the mine in October, 2020.
The Tokisud North mine was allocated to the National Mineral Development Corporation in August, 2020 while the Ganeshpur mine issue is currently sub judice.

The Tokisud mine was de-allocated because Essar Power deviated from the performance milestones agreed earlier, while Union coal ministry decided to terminate the vesting order for the Ganeshpur mine because GMR Energy had not renewed bank guarantees worth Rs 295 crore after their validity expired in December, 2018. None of the three mines are currently operational.

The Jitpur mine has extractable reserves of 65.5 million tonne (MT), while the Tokisud North and the Ganeshpur mines have reserves of 51.9 MT and 91.8 MT, respectively. Adani Group entities have won three out the eight mines, which went under the hammer in the latest tranche of commercial coal mining auctions, held in August this year, when it placed the highest bids for the Khargaon and the Jhigador mines in Chhattisgarh the Gondkhari block in Maharashtra.

This was the second set of coal assets to be auctioned off through the new market-determined revenue share model that replaced the fixed fee/tonne regime that had earlier turned off private investors.
Source: Financial Express

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