NEW DELHI | June 08, 2017: The government is considering approaching the Supreme Court to deter power companies from surrendering coal mining projects they have won in auctions for captive use.

Of the five companies that got producing coal blocks after aggressive bids, two are considering surrendering them, while another two are unable to start production due to the weak financial position, sources said.

Essar Power, which bagged the Tokisud North coal mine, and the GMR group that won the Talabira coal block approached the Delhi High Court seeking the government decision to cap pass through fixed costs be quashed or they are allowed to surrender the blocks without penalties.

They filed the consequential petitions after Monnet Ispat & Energy and Mandakini Exploration & Mining surrendered the non-producing mines they had won, after getting a favourable order from the court on their claim that they were not aware of the government’s plan on fixed costs at the time of bidding.

An executive at Essar Power confirmed filing of the petition. A GMR spokesperson did not respond to ET’s query.

Sources said the court has sent notices to ministries of power and coal seeking a response to the petitions.

A senior government official said the Centre will approach the Supreme Court against the high court verdict. The coal ministry had earlier issued a show-cause notice to Essar Power seeking reasons for the delay in coal mining.

Meanwhile, state-run Durgapur Projects, which bagged the Trans Damodar coal mine, has not been able to start work even as it posted a Rs 800 crore annual loss, the coal ministry official said. Jaiprakash Ventures that won Amelia North is also not in a position to start mining operations, sources said.

Among the five that won producing blocks, Kolkata-based CESC is the only company that is operating its project. Its power purchase agreement with distributors allows it to partially pass on the fixed cost on the Sarisatolli block.

Mandakini Exploration, a joint venture between Jindal India Thermal Power and Monnet Ispat, had in the court questioned the Centre’s decision to limit fixed costs of power plants that could be factored in electricity tariffs.

They argued that capping fixed costs after completing auctions amounted to an ex-post facto change in bidding conditions and also rendered its power project unviable.

The government maintains that bidders for power blocks were informed in pre-bid meetings that fixed costs will not be allowed to be passed on.

(Source: http://economictimes.indiatimes.com/)