Coal Mining Development proposals for Jharkhand

A unit of Australia’s Leighton Holdings Ltd. and India’s Singareni Collieries Co. are among about half a dozen companies that have bid to develop power producer NTPC Ltd.’s Chatti-Bariatu coal mine in the eastern state of Jharkhand.

“The papers submitted [by the bidders] are being examined,” said NTPC Chairman Arup Choudhury. “I think we should be able to finalize the contractor in three-four months’ time.” The utility is now rushing to start production at six coal deposits awarded by the government, and faces the threat of the Coal Ministry cancelling its rights on these mines if it misses development deadlines.

The government has opened up India’s coal-mining sector to increase output, which in turn can help expand the nation’s electricity generation. While commercial coal mining in India is still limited to state-run Coal India Ltd. and Singareni Collieries, the government has been allocating coal blocks for captive mining to steel, cement and power producers in order to boost output, although many of these reserves remain underdeveloped. Choudhury didn’t put a value on the contract.

In December, Leighton’s unit Thiess won a 20-year, US $5.5 billion contract to develop and operate NTPC’s Pakri Barwadih coal mine in eastern India, which is around three times larger than Chatti-Bariatu. It was the first of NTPC’s six blocks to have been awarded. As India’s laws prevent foreign companies from owning or selling coal, under the terms of its contract, Thiess will collect fees for developing and managing the facility.

NTPC now hopes to start output at its Pakri Barwadih mine in 2012, Choudhury said, after having missed an earlier deadline in 2009. Coal shortages are crippling output from NTPC’s coal-fired power plants at a time it is planning a rapid buildup of capacity. Around 80 per cent of NTPC’s installed generating capacity is coal-based.

NTPC plans to add 5,000 Mw of new capacity annually for the next six years, and expects capital expenditure of 160 billion rupees (US $3.6 billion) to 170 billion rupees (US $3.8 billion) each year to achieve it. “Fuel can be a limiting factor in expansion,” Choudhury said. “So we are taking all measures to ensure supply.”