The Hindu Business Line : NTPC mulls arm for captive coal mining

The company was recently awarded seven coal blocks with total mineable reserves of 5.7 billion tonnes; it is aiming at captive production of 60 million tonne over 7-8 years.

The company currently consumes 104 million tonnes, of which close to 100 million tonnes is supplied by Coal India Ltd.

The residual requirement is met through imports.

"NTPC has acquired seven coal blocks in the last few months and has set a production target of 60 million tonnes," a senior company official said.

"As the size of the operation grows, there are arguments in favour of spinning off NTPC's Mining Department into a subsidiary. However, such options are to be weighted against the tax implications and other management issues involved."

He added: "Issues like sales tax and revenue outgo on coal bought by NTPC from the subsidiary vis-à-vis the economies of scale and management issues are being critically weighed to arrive at a conclusion."

Meanwhile, NTPC has roped in former Coal India Chairman Mr Sashi Kumar as advisor to its mining activities.

The company is currently in the process of obtaining necessary clearances from the Central and State Governments for rolling out captive mining operations.

The company has already set up a 50:50 joint venture with Coal India for captive mining at Brahmini and Chichro Patsimal blocks, both in Jharkhand.

Mining is likely to commence at Pakri Barwadih block near North Karanpura coalfields in Jharkhand by December 2007.

The other captive coal blocks available to the company are Kerandari and Chatti Bariatu in Jharkhand and Dulanga and Talaipalli in Chhattisgarh.