Going against the norms of the coal ministry, the block was auctioned first by MSMC and then by Maha Tamil Collieries Limited (MTCL), a joint venture of the two allottees, with both standing to gain immensely. Neither made any attempt to inform the coal ministry about the auction even though the dispute between the two companies was settled in New Delhi.
The MSMC, which held only 23% share, went on to auction its part without informing the TNEB and even wanted the ministry to split the block. It was only when the ministry put its foot down that the two shook hands, formed a JV and then auctioned the block together on August 28, 2009. The highest bidder Lanco has to produce the coal and establish a 2000mw power plant in Chhattisgarh.
The agreement with Lanco too is highly suspicious as MSMC gets the coal free of cost and TNEB the power at a heavily subsidized rate as well as revenue from coal. Lanco gets to sell any additional power that it generates.
The MSMC was allotted four captive coal blocks - 3 in Vidarbha and another in Chhattisgarh. The Gare Palma block was in Chhattisgarh and allotted jointly with the TNEB on August 2, 2006. In the block comprising geological reserves of 768 million tonne (mt) coal, the MSMC was given only a share of 23% of total reserves. Thus, the MSMC was entitled for 175 mt and TNEB 593 mt.
According to data available with MSMC, the block was spread over 24.25 sq.km and allotted specifically to be used for power generation. The MSMC auctioned Gare Palma block along with its other three allotments in 2008.
A source in the MSMC told TOI that the private companies which participated in the bidding process sought clarification about the method of mining to be undertaken and excavation of coal. "Private companies wanted MSMC's portion to be demarcated. Then we had no option but to intimate TNEB about the auction plan. Miffed, the TNEB wrote to the MoC seeking advice on the split," the source said. The coal ministry said there was no such provision.
The MSMC's auction was won by top power company Indiabulls Group. "We were to get Rs17 per tonne for our share. We would also have got another 51% from the total revenue from the sale of coal. But the tender had to be cancelled as it was incorrect," the source said.
After the coal ministry intervened, the MTCL was formed with its headquarters in the city. The JV went on to float a tender inviting private companies to develop the coal block and also establish a 2,000MW power plant in Chhattisgarh.
Here too the MSMC and TNEB had different views on sharing the gains. Even though Maharashtra is facing severe power shortage and bills are high due to purchase from private power producers, the MSMC was not ready to accept the power to be generated from the Lanco plant. Instead, the MSMC wanted the coal from its share in the block the sale of which would have fetched it more money.
The TNEB too could have chose MSMC's path but it seemed wary of the power shortfall in the Tamil Nadu and hence opted to source the power from Lanco's plant.
As reported by TOI on Saturday, MSMC has also made JVs for its two other allotted blocks in Vidarbha. These are commercial blocks from which the company has already got Rs205 crores. The amount is expected to rise five times once the production starts.