The government has cancelled the allocation of one of the coal mines for Anil Ambani Group's ultra mega power project at Sasan, Madhya Pradesh, which was found to be over and above the power project's requirement.
The coal ministry's decision to cancel the Chhatrasal coal block is in line with the Supreme Court's directive forbidding commercial use of surplus coal or sales to other power plants from such units.
The decision, which also forbids the use of coal from other mines of the 4,000 MW project for other plants, would bar Reliance Power from using surplus coal from Sasan Project's mines to fuel the company's Rs21,000 crore Chitrangi power project.
Reliance Power's Sasan UMPP is being fed by coal from Moher and Moher-Amlohri and Chatrasal mines. Reliance Power had last month announced the start of coal production at the 20-million tonne Moher and Moher-Amlohri block.
The minister for power, coal and renewable energy Piyush Goel is reported to have approved de-allocation of one of the three mines attached to Sasan and also disallowed the use of surplus coal from the remaining mines.
However, Reliance power has refuted the coal ministry's contention that there is surplus coal available at the mines allocated to the Sasan power project.
Earlier, Reliance Power had been permitted to use surplus coal from the three mines given to Sasan UMPP in 2008.
However, following the Supreme Court decision last year, it was allowed to use the surplus coal only for generating electricity at tariffs derived through competitive bidding.
The coal ministry's latest decision restricts use of surplus coal from Chatrasal mine for the company's 4,000-MW Chitrangi power project.
The ministry has also decided to restrict the use of coal from Moher and Moher-Amlohri block to only Sasan project.
The Sasan UMPP achieved commercial operation recently after all six units totalling 3,960 MW started working continuously for 24 hours.
The project was completed 12 months ahead of the power purchase agreement schedule. Reliance has invested Rs27,000 crore in the project.