Coal De-Allocation: India Risks Power Cuts, $66 Bn Investments

NEW DELHI: India could face power disruptions even as 4 trillion ($66 billion) worth of investments hang in balance with the Supreme Court on wednesday cancelling 214 coal blocks alloted since 1993 which it had declared illegal, stakeholders said.

They, howvever, hope the verdict will end uncertainties in the economy and the government will put in place a prudent policy environment to usher in transparency in the system.

State Bank of India chairperson, Arundhati Bhattacharya said the bank looks forward to a “swift and transparent” bidding process of the coal blocks cancelled by the Supreme Court.

“We believe that uncertainty is possibly the worst enemy of growth. We are glad that this is over with the SC verdict on coal blocks allocation,” Bhattacharya said ni a statement.

“We now look forward for a quick plan of action for ensuring that coal supplies are not disrupted and thereafter a swift and transparent bidding process for reallocation,” the SBI chairperson added.

The court has also said that companies that have been mining coal have to pay for all the coal that they have mined or used until 31 March 2015.

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Jayaswal Neco, one of the firms affected by the judgement, said the company had long mined the coal from the mine allocated to it and had already passed on the benefits to the consumers.

Giving an estimate of the economic impact of the deallocations, Naveen Jindal, chairman of another affected company Jindal Steel and Power (JSPL) said earlier this month that about 400,000 crore of investment made to develop coal mines would be in jeopardy if the blocks were to be de-allocated.

"If we term the government's coal allocation policy as faulty and illegal, then the effort put in by the investors to revive the discarded mines of Coal India, the entire 4 lakh crore investment would be in jeopardy," Jindal had said.

Describing the deallocations of so many blocks as "harsh", industry chamber Assocham said:"Our main concern is on the kind of negative impact on the economy which has just been showing signs of recovery after over two years of slowdown." ”

"Being largely dependent on the thermal power, it is the coal which fires the economic growth, which will be halted, besides, the dependence on coal imports will increase," said Assocham president Rana Kapoor.

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