You are using an older browser version. Please use a supported version for the best MSN experience.

Bengal may move first to end logjam with centre on Raghunathpur power plant

LiveMint logoLiveMint 04-06-2017 Arkamoy Dutta Majumdar

A bitter spat and mistrust between the Union ministry of coal and power and the government of West Bengal has led to a central public sector enterprise bleeding Rs70 crore a month, Rs5,000 crore of bank loans almost turning sticky and two coal mines remaining unexploited for years.

But the impasse is likely to get resolved within a month. It is expected that the West Bengal government will take the first step to end the logjam by giving its clearance to the transfer of Raghunathpur thermal power plant to a proposed joint venture between Damodar Valley Corp. Ltd (DVC) and NLC India Ltd.

The commissioning of the 1,200-megawatt (MW) Raghunathpur thermal power plant was delayed by over four years and this led to a huge cost overrun. Also, DVC is unable to sell power from it. So, DVC is looking to transfer the unit to a joint venture with NLC (formerly Neyveli Lignite Corp.) but needs clearance from West Bengal.

So far, West Bengal has declined to grant the clearance, saying DVC must end a dispute over pay with a small section of its employees. But this wasn’t the real reason the state held back clearance to the much-required restructuring of DVC, an enterprise in which the state government owns a 33% stake.

The board of DVC has given its clearance to settle the dispute over compensation, said chairman Andrew W.K. Langstieh. However, the board has decided that the settlement will happen only after West Bengal has given its clearance to the transfer of the Raghunathpur power plant to the proposed joint venture, he added.

West Bengal’s official stance on the issue remains unchanged. Its power minister, Sovandeb Chattopadhyay, said the two issues should be treated separately. “DVC shouldn’t be setting conditions for accepting workers’ demands,” he added. “This is not acceptable to us.”

But what is actually holding up the transfer is the delay in allotting the Deocha-Pachami coal block to West Bengal, said two government officials in Kolkata who asked not to be named. Recently, chief minister Mamata Banerjee drew the prime minister’s attention to the inordinate delay in allotting the coal block, they added.

The centre wouldn’t give final clearance to the allotment of the Deocha-Pachami block unless DVC got the clearance from West Bengal to divest the Raghunathpur plant to the proposed joint venture; and the state wouldn’t give its clearance unless the centre concluded the formalities of allotting the coal block, said these officials.

A key coal and power ministry official in New Delhi said the Deocha-Pachami block was proposed to be given for exploitation by seven states back in 2013. It took these states two years to incorporate a company to exploit the asset, this person said, asking not to be identified.

The centre realized that seven states would never be able to come together and operate a mine. So, it was decided that they would be given separate mines, according to this official. The allotment of these mines would be cleared within a couple of months, he added.

Caught in the crossfire, DVC is bleeding. Sub-optimal utilization of the 1,200-MW power plant is resulting in the company losing Rs70 crore a month. Also, Rs5,000 crore of bank loans will get transferred to the books of the proposed joint venture, according Langstieh. Once the dispute over Raghunathpur is settled, DVC, too, will get another coal mine, said the chairman.

“DVC has had to wait for a long time, but it may not be long before this centre-state spat is resolved,” said one of the officials in Kolkata cited above

More From LiveMint

image beaconimage beaconimage beacon