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Power projects could be worst-hit by SC ruling

business Updated: Aug 27, 2014 00:10 IST
HT Correspondent
HT Correspondent
Hindustan Times

Uncertainty looms over the fate of 28,000 to 30,000 megawatt of power generation capacity if the Supreme Court were to cancel coal block allocations between 1993 and 2010, which it has declared “illegal”.

The apex court on Monday ruled that all coal block allocations done since 1993 were illegal. The case will resume on September 1.

“The cost of developing the 28,000 MW power capacity — from both state-run and private sector projects along with the cost of integrated coal mine development comes to around Rs 2 lakh crore... out of this close to Rs 1.2 lakh crore investment is already on ground that stands invested... it can only be more and not less than this,” said Ashok Khurana, who heads the Association of Power Producers.

Taking a 70:30 debt-equity ratio in these projects, the lenders have close to Rs 1.4-lakh crore funds committed to these ventures.

“But the good part is that the period of uncertainty prevailing over the fate of these blocks will get over... It’s just that instead of mining being done by the present owner of these mines, it will be done by somebody else and the coal will eventually be made available... What now remains to be seen is what steps will the government take to mitigate the adverse fallout... if the government moves fast and takes coherent steps in consultations with the stakeholders, a great part of the impact can be capped,” Khurana said.