Jindal Steel shelves $10-bn coal-to-diesel project: report

Stung by the Supreme Court order scrapping the allocation of nine of its coal blocks, including the 1.5 billion tonne coal block in Odisha, among the 214 coal blocks that were found to have been allocated illegally, Jindal Steel and Power Ltd has shelved a $10-billion coal-to-diesel project, Reuters reported.

The apex court had, in September, ordered scrapping of 214 coal blocks allocated to private firms since 1993 ruling that the selective allocation of the mining assets was illegal and arbitrary.

Navin Jindal-led Jindal Steel was the worst hit with nine of its coalfields taken back in the tough order.

The report quoted Naveen Jindal, chairman of the company, as saying that the government seemed not so keen to support his plan of converting low-quality coal to 80,000 barrels per day of diesel.

India is one of the biggest importers of crude oil that is refined to make diesel and petrol.

"The project was specifically to meet the strategic needs of the country," Jindal said on Monday in an interview at his Delhi residence. "(But) the government does not seem to be interested. If there is no coal block, how can the project go ahead?"

Following the Supreme Court order, the government had come out with plans to auction coal blocks to private users, including foreign companies, at a reasonable price, and had promised to finish the auction by March next year.

But, for participating in the auction, Jindal, which used to own some of these coal blocks, will have to deposit about Rs3,000 crore ($485 million) with the government by December as a levy for the coal it has dug out from the mines that now stand cancelled.

Besides, Jindal said the coal royalty levied in India is the highest and combined with the competitive bidding, coal mining in the country would become a losing proposition. Also, he pointed out, the government takes an assurance on the end-use of the coal produced from the mines.

"India charges the highest royalty on coal in the world but captive producers couldn't even sell coal," Jindal said at a conference over the weekend on the economic impact of judicial decisions organised by the Independent Power Producers Association of India (IPPAI).

"In other countries, the government being the owner of the mines, charges only royalty," he added.

The apex court had, in August, held that the allocation of 218 blocks between 1993 and 2010 was done in an illegal manner by an "ad-hoc and casual" manner resulting in the "unfair distribution" of the "national wealth".

The JSPL chairman has earlier said that about Rs400,000 crore investment made to develop coal mines would be in jeopardy if the blocks were reallocated.

Jindal, a former Congress member of Parliament, however, said he would nevertheless expand the company's businesses aggressively.

Jindal Steel and Power had proposed to raise steel capacity to 12 million tonnes per year in three years from about 7 million tonnes at present. The company's power generation was to hit 5,000 megawatt within a year from about 3,800 at present.