SECL has plans to expand the capacity of Gevra open cast mine from the existing 18 million tonne (mt) to 25mt and that of Dipka from 10mt to 20mt by 2005-06. Both the mines are under Gevra area located in Korba district of Madhya Pradesh and produce power grade coal. "Although Ranchi-based Central Mine Planning & Design Institute has already prepared a plan for expanding the Gevra, and Dipka's plan is being prepared by it, we are not in a position to go ahead until we get a steady market for power grade coal in and around MP," SECL's chairman and managing director, Gautam Kumar Jha, told `The Financial Express'.

Considering the existing freight structure for coal transport, SECL coal will not fetch a competitive price in the west coast, he argued. Freight for bringing coal from South Africa to Gujarat coast, for example, is only $7 (around Rs 300) per tonne, whereas freight for carrying SECL coal to the same destination is around Rs 1100 per tonne.

A number of new power plants, including the 2x289mw Bina Power promoted by a joint venture of Aditya Birla group and Power Gen Plc of the UK, and the 2x535mw Daewoo Power, were to have come up in Madhya Pradesh. After signing coal supply pacts with SECL, both Bina and Daewoo cancelled them as another power company went to the Supreme Court demanding similar escrow guarantee from the state for its project. "Until the issue is clinched and power companies sign coal supply agreement with us, we cannot expand capacity," Jha said. Normally coal between B to D grades is considered to be industrial coal which contain less ash and is used by cement and other industries, while power grade coal (normally F) contains higher percentage of ash and is used only by power plants.

Moreover, expansion of the Gevra area would also depend on strengthening of the railway bridge on the Hasdeo river near Korba for coal evacuation. The railway has already started laying the third line between Raipur and Gevra. But the railway bridge will continue to be a problem.

"We are seriously considering production of industrial grade, particularly B to D grades, as such grades have steady markets in our country," he said.