Major corporates are staring at an uncertain future after investing substantially on their projects
Investors are visibly worried on the fate of end-use projects linked to allocated coal blocks after the recent Supreme Court ruling pronouncing allocation of all such blocks as illegal.
For investors who have pumped in significant money on their projects in Odisha anticipating to start mining from these captive coal blocks, the apex court ruling has come as a dampener.
Major corporates like Jindal Steel & Power Ltd-JSPL (Rs 20,000 crore), Jindal Stainless Ltd-JSL (Rs 10,000 crore), Bhushan Steel & Strips Ltd (Rs 25,000 crore), Vedanta Group firm Sterlite Energy (Rs 8,038 crore) and GMR Energy (Rs 5,848 crore) are staring at an uncertain future after investing substantially on their projects.
Already faced with huge delay to mine coal from their allotted blocks, these project proponents are running their end use plants on linked coal supplies from Coal India controlled mines.
Investments to the order of above Rs 1 lakh crore has been grounded on end-use plants across sectors like steel, power, aluminium, cement and sponge iron. Besides, the projects linked to these ill-fated coal blocks employ about 38,000 people directly and another 3 lakh persons indirectly.
The ministry of coal had allocated 32 blocks in the state for captive consumption and later de-allocated seven
For the independent power producers (IPPs) who have already pumped in over Rs 30,000 crore to see their projects grounded, the top court’s observation has come as a setback. Among the IPPs, the investments have mainly flown from Vedanta Group firm Sesa Sterlite, GMR Kamalanga, Jindal India Thermal Power Ltd (JITPL) Ind-Barath Energy Utkal Ltd and Monnet Power.
While Sesa Sterlite has fully commissioned its 2,400 Mw plant at Bhurkamunda near Jharsuguda, GMR has put on stream three 350 Mw units of its plant at Kamalanga in Dhenkanal district. Both the proponents have been running their plants on linked coal supplies despite winning coal blocks. Others like JITPL, Ind-Barath Energy and Monnet Power were in advanced stage of commissioning their projects. In its August 24 ruling, the Supreme Court held that all coal block allocations made since 1993 till 2010 by the NDA and UPA regimes were done in an illegal manner without application of mind.
The top court that took scrutiny of 218 coal blocks said common good and public interest suffered heavily since “there was no fair and transparent procedure, all resulting in unfair distribution of the national wealth.”
Citing that allocations made both under the screening committee route and the government dispensation route are arbitrary and illegal, the SC underscored the need for further hearing fixed on September 1.