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'No-Go' policy lands big ticket projects in trouble
5 January 2011: The Union MoEF’s ‘No Go’ policy relating to coal blocks has hit projects worth about Rs 40,000 crore in electricity, steel and cement sector.
While some of the companies had invested in the blocks allotted to them, others had invested in the linked end-use projects, or both.
The Planning Commission is the government’s apex policy advisory body and monitors five-year Plan targets. “It is not possible to quantify the overall impact on Eleventh Plan’s investment targets but there would definitely be some hit if the issue is not resolved on a priority basis..
With coal blocks allotted to over two dozen companies — including NTPC, Coal India, Hindalco, Essar Power and Adani — now falling under the No-Go zones, the private sector’s contribution to infrastructure investment could be jeopardised.
In the power sector alone, timely commissioning of 50,000 Mw of capacity has become doubtful owing to the No-Go classification. This includes projects to be commissioned both in the eleventh and the twelfth Plan periods.
Overall, 203 coal blocks with reserves of over 600 million tonnes have been stuck due to the No-Go criterion. Under the controversial policy, the government has already classified the companies that were allotted coal mines before the No-Go classification in two groups.
Category-A companies have made significant investments in coal mining projects and are required to be given alternative blocks. Companies that have not made major progress in coal blocks have been placed in Category B.
Source: Business Standard