Home ECONOMY Monnet Ispat to surrender Utkal-C coal block in Odisha

Monnet Ispat to surrender Utkal-C coal block in Odisha

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Odisha Sun Times Business Bureau
New Delhi, Aug 1:

Monnet Ispat & Energy’s subsidiary Monnet Power Company, which had bagged the Utkal-C coal block in Odisha during the second phase auction of the blocks, has decided to surrender it owing to the government’s decision to put a ceiling on fixed costs.

File Pic Courtesy; livemint.com
File Pic Courtesy; livemint.com

The company urged the Delhi High Court on Friday to direct the government to allow it to exit the Utkal-C coal block without levying any penalty or barring it from participating in future rounds of coal block auctions.

The power company decided to surrender the coal block after the Union government’s decision to put a ceiling on the fixed costs that a power plant can issue into electricity tariffs.

The company argued in the court that capping of fixed cost was determined after the auction of coal blocks, which contravenes bidding conditions of coal mines for the power sector.

Notably, the company has not yet approached the Coal Ministry with a formal proposal  for surrendering the Utkal-C coal block.

It may be mentioned that Monnet Ispat & Energy had won the Utkal-C coal block for Rs 770 per tonne, according to the results of e-Auction for Schedule III coal mines announced by the Ministry of Coal on March 9 this year. The Utkal-C coal block has a total extractable reserve of 123.86 million tonnes and was earlier allotted to Utkal Coal.

In a related development, the Delhi High Court also conducted the hearing of a case related to Mandakini Exploration and Mining, a joint venture of Jindal India Thermal Power and Monnet Power.

During the hearing, the court asked the government to justify the rationale behind capping fixed costs. The court questioned how the government can regulate costs in competitive bidding. The next hearings of the cases have been posted to August 13.