The Indian coal ministry has decided to terminate the allotment order of Jitpur coal block to Adani Power on grounds of delay in its timely operationalisation.
It may be recalled that Adani Power had secured the Jitpur block during the second tranche of auctions in 2015, which were held after all the previous allocations were cancelled by the Supreme Court.
However, the allottee had not shown intent to commence production since costs involved in transportation of the coal from the block located in Godda, Jharkhand to its power plant in Mundra, Gujarat were unviable.
Notably, the process for securing the forest clearance for the block was pending for a long while which did not get off the ground despite repeated instructions conveyed by the government to the company.
Consequence
As a result of the termination, payments made by Adani Power towards performance security and other particulars remain forfeited. Besides, the company would be liable to pay for the obligations emerging from the breach of the allotment agreement.
More importantly, the latest announcement gets added to the list of blocks, ie, Patal East, Mandakini-B, Kasta East, Brinda and Sasai, which have been issued termination orders since the beginning of FY’21.
Delay in development of coal blocks has been a major constraint in raising the level of captive production. Besides, terminations of coal block allotments have further derailed the government’s plan to utilise the existing resources.
During FY’21, production from captive blocks was registered at 61.5 million tonnes (mn t), which accounted for a mere 9% in the country’s overall coal production of 716.01 mn t.
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