MahaGenco pins hopes on allocation of new mines after Supreme Court scraps licence

MUMBAI: The fate of MahaGenco’s power projects worth Rs 20,000 crore and combined generation capacity of over 3,000 MW hinges on allocation of new mines after the Supreme Court scrapped coal extraction licences given to most private companies, senior company executives said. MahaGenco Maharashtra’s largest state-owned power generation firm, is set to add about 1,000 MW of capacity by March end.
The company had permission to extract 30 million tonnes of coal per annum from the Machhakata-Mahanadi block, but the court cancelled its licence, along with those of several other companies, in September last year saying the allocations were illegal.

Managing director Asheesh Sharma told ETthat if the power generator is unable to secure fuel supply for the new capacity, it may have to shut some inefficient plants and divert coal to these new plants or resort to using imported coal. MahaGenco has an installed capacity of 11,237 MW, 70% of which is thermal.

"Lack of fuel linkages and coal supply is now becoming a huge issue, especially as we have close to 1,000 MW of fresh power capacity that is slated to come online by this fiscal end. We had escalated the matter and chief minister Devendra Fadnavis and the power minster Piyush Goyal assured us that we will get a mine that is close to production,"Sharma said, adding that as a back-up plan, the company has also asked Coal India for a tapering fuel linkage.

"The issue of coal supply has become so critical now that we have no choice but to defer some new projects like our power plant in Dhule, as there is a coal shortage at our existing plants and no fuel linkages in place for new thermal power projects in Koradi in Nagpur, Chandrapur and Parli,"Sharma said.

The Koradi power project has a capacity of 1,980 MW, the Chandrapur project 1,000 MW and the Parli project 250 MW. The combined investment in these projects is Rs 17,000-Rs 20,000 crore, all of which is debt funded by the Rural Electrication Corporation and the Power Finance Corporation, according to Sharma. One 660 MW unit in Koradi and a 500 MW unit in Chandrapur are slated to commence power production by March end this year.

The Machhakata and Mahanadi coal blocks in Odisha were allocated to MahaGenco and the Gujarat State Electricity Corporation in 2006, and a joint venture company, the MahaGuj Collieries, was formed to develop them. In 2012, the coal ministry had issued a notice to this firm asking them to explain the delay in developing these blocks.

"We had then made a presentation on the issue explaining the reasons behind the delay, which were accepted and the block was not deallocated. It was only deallocated in September last year as part of the Supreme Court’s larger directive,"said Sharma.