RAJMAHAL, Dec 25: Eastern Coalfields Ltd has decided to wait for National Thermal Power Corp to increase coal offtake before going ahead with the Rajmahal C opencast project, the third phase of the highly-mechanised mine being developed for the central power utility.

NTPC, which is already drawing coal from Rajmahal A, is yet to agree to the price for coal from the Rs 560.32-crore third phase.

K C Patni, ECL's chief general manager in charge of the Rajmahal mines, believes that NTPC is running its Farakka and Kahalgaon plants at low capacity because of poor industrial demand in the east. Unless industrial power demand picks up, NTPC is unlikely to stick to its committed offtake, Patni said.

He said NTPC is failing to pick up the production of even Rajmahal A, at which 7.5 lakh tonnes have piled up.

Insiders said differences with NTPC over prices are also holding up the third phase of the project, billed as Asia's most mechanised coal mine."If NTPC fails to take our coal according to the schedule agreed upon, we will not be in a position to invest the huge sum needed for Rajmahal C," Patni told The Financial Express. "We are anxiously waiting for NTPC to increase off-take."

NTPC sources said the power utility is trying to export power to the northern and western regions, where power demand is picking up. But Power Grid Corp of India (PowerGrid) will have to improve the grid before NTPC can despatch heavy loads.

ECL has already decided to wait till 1998-99 fiscal before implementing the second phase of Rajmahal, a Rs 49.42-crore project which will have a capacity of 1.5 million tonnes per annum.

The Rajmahal mines were opened in backward Godda district of Bihar as captive mines for NTPC's 1630MW Farakka plant in West Bengal and 840MW Kahalgaon plant in Bihar. The total requirement of coal for these two plants was assessed at around 13 mtpa.

The first phase was set up at a cost of Rs 966 crore, and has a production target of 10.5 mtpa of F grade coal with 2,400-3,300 UCV (useful calorific value). The entire coal was supposed to be picked up by NTPC.

At a meeting with CIL chairman P K Sengupta in Delhi in mid-December, NTPC chairman Rajinder Singh had agreed to pick up 10.5 million tonnes in this fiscal and 11 million tonnes in the next fiscal.

Rajmahal C will produce 4 mtpa of G grade coal with 1,300-2,399 UCV, which is suitable for power station consumption.

A senior Rajmahal official said that the production cost at 80 per cent capacity use had been projected at Rs 392.31 per tonne. But, the cost will be Rs 658.36 per tonne at the same operating level if ECL is to get a minimum internal rate of return of 17 per cent, he said.

"Unless we get 17 per cent IRR, the mine cannot be run. We cannot invest for making losses," the official said.

Even then, for NTPC, Rajmahal coal will be cheaper than imported coal, the official said.

Sources said NTPC had initially declined to pay the higher rate, and tapped an Australian coal major for developing the mine. When the Australian company demanded an even higher price, NTPC turned back to Rajmahal, they said.

"To start the project, we need a negotiated price for the coal and want to get an assurance from NTPC that offtake should be at a certain level," the official said.

Patni stressed that ECL has not shelved the third phase. He said the government has notified 400ha of forest land for the project and the transfer is expected any time now. ECL has also built a temporary approach road, and is drilling borewells.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.