In a major setback to India’s largest power generator and Maharatna NTPC Ltd, the Union government announced it would cancel allocations of five of the eight blocks awarded to the company over the past seven years.

The five blocks – Chatti Bariatu, Chatti Bariatu (South), Kerandari, Brahmani and Chichiro Patsimal – have combined geological reserves of 3 billion tonnes.

The decision, which is based on the recommendations of a review committee headed by the special secretary in the ministry of coal, Alok Perti, could hurt NTPC’s long-term fuel securing plans, experts believe. The power producer currently requires around 150 million tonnes of coal to operate 36,000 Mw capacity annually. The company plans to meet around 20 per cent of its coal requirement of 250 MT in 2017 through captive production.

The eight coal mines allotted to NTPC so far by the coal ministry possess reserves of around 5 billion tonnes. All these were expected to come into production between April 2008 and March 2012. However, not a single block has commenced production so far even while the power generator has set for itself a target of ramping up coal production from its captive mines to 47 MTPA by 2017.

Apart from NTPC, the ministry has decided to cancel the licences for blocks awarded to Damodar Valley Corporation, Andhra Pradesh Power Generation Corporation, Tenughat Vidyut Nigam Ltd and the Electricity Boards of Bihar and Jharkhand, among others, for non-adherence to norms. The private companies facing deallocation of blocks are VS Lignite and Baidyanath Ayurved Bhawan.