The Economic Times reports the allocation of coal blocks in Orissa to various power generation companies across the country. Following is an excerpt from that report.

The Damodar Valley Corporation (DVC) has been allocated Saharpur Jamarpani block having 600 MT reserves in Jharkhand and two blocks in Manoharpur with 531 MT in Orissa for the Orissa Power Generation Company (OPGENCO).

The Naini coal block in Orissa (500 MT) has been allocated to Gujarat Mineral Development Corporation and Pondicherry Industrial Promotion and Development Corporation, the official said.

Moreover, two blocks at Chandipara in Orissa (1,589 MT) has been allocated to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd, CMDC and Maharashtra State Power Generation Company, the official said.

He said the Baitarani West block in Orissa (602 MT) has been allocated to GPCL, OHPGCL and KSEB while Mandakini B block also in Orissa (1,200 MT) has been allocated to Tamil Nadu Electricity Board, Assam Mineral Development Corporation, Meghalaya Mineral Development Corporation and Orissa Mining Corporation Ltd.

The above allocation is done by the Coal ministry in Delhi. Although the coal mining will add to Orissa’s revenue through royalty, a big concern is the low rate of royalty fixed by the center which also does not change as often as it should. Some reports on this were published in Financial Express and other papers. Following is Orissa government’s stand on this issue and the issue of compensation on thermal power generation.

Revision of rates of royalty on coal and other Major Minerals on Ad valorem basis.

Orissa is a mineral rich State, but it does not get non-tax revenue in shape of royalty from such major minerals in the State to the desired extent as the rates of royalty are not being revised in time. The 12th Finance Commission have recommended that the rate of royalty should be revised on ad valorem basis. But the Government of India has not yet done it. In the past, the rate of royalty on coal and other minerals was revised on expiry of more than 5 to 7 years though the rule stipulates that there should be revision after expiry of 3 years. The delay in the revision of the rate of royalty in coal and other major minerals has caused a loss of Rs.150.00 crore per annum. The State has suggested royalty on ad valorem basis.

Compensation on Thermal Power Generation.

Orissa has a vast coal deposit. Orissa is a power surplus State and it exports power to other States. Since, electricity duty can be charged on consumption only, the importing state benefits while the exporting state has to bear the negative externality such as environmental degradation due to mining etc. This tantamounts to transfer of resources from the producer state without any compensation for the huge negative externality as well as depletion of its natural resources. If 1000 MW power is generated in Orissa and evacuated, the importing State gets electricity duty to the extent of Rs.100 crores, while the State in which the power is produced does not get anything. This situation has to be altered by either allowing the State to levy duty on generation or else mandate that a percentage of power generated should be given free of cost to the State by the Central Public Sector generating companies as is the case in Hydro Power Generation.