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Indian Panel Recommends Approval of Coal Blocks to Cabinet

A group of Indian ministers agreed to recommend approval of coal blocks allotted to Reliance Power Ltd. and a venture of Essar Energy Plc and Hindalco Industries Ltd. to the country’s cabinet, Coal Secretary Alok Perti said.

The positive recommendation is a step toward ensuring coal supplies for power plants being built by the companies as Asia’s second-fastest growing major economy seeks to cut blackouts. A committee appointed by the environment ministry earlier recommended conditional approval for the blocks, which are located in forest areas.

“Clearance for these projects has been long due,” Deven Choksey, managing director at Mumbai-based K.R. Choksey Shares & Securities Pvt, said by telephone before the ministers meeting. “The coal ministry and the environment ministry will have to work hand in hand if India has to meet its power demand.”

The Chhatrasal block is one of three that will supply coal for a 3,960-megawatt project at Sasan being built by Reliance Power, controlled by billionaire Anil Ambani. The Mahan block, allotted to Essar Energy and Hindalco, will be the source of fuel for generation plants with a combined capacity of 1,950 megawatts.

Reliance Power plans to start the first, 660-megawatt unit at Sasan in December. Hindalco, India’s second-largest aluminum producer, formed a venture with Essar to develop the Mahan coal mine. Hindalco is planning a smelter in the state and expects to start mining a year after it gets permission, Managing Director Debu Bhattacharya said May 8.

Environmental restrictions in India have led to delays in projects, leading to shortages of commodities, including coal and iron ore. The country’s annual coal output may rise 28 percent to 715 million tons in the next five years, lagging behind a 41 percent increase in demand to 981 million tons, according to Planning Commission estimates.

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