NTPC Said Close to Awarding $4 Billion Coal Mine Contract

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NTPC Ltd., India’s largest power-generation company, is close to awarding a contract worth $4 billion for starting its first coal mine in the country, according to three people with knowledge of the decision.

An auction to choose an operator for the Pakri Barwadih mine in the eastern state of Jharkhand has concluded and a decision will be taken at a board meeting this week, said the people. A venture of Thriveni Earthmovers Pvt. and Sainik Mining won the auction, quoting 260 billion rupees ($4 billion) for developing and running the mine over 25 years, they said.

Having its own supply will help the state-run utility save on more expensive imports of coal, the fuel that fires 75 percent of its 45 gigawatt capacity. Since NTPC has to pass on the benefits of lower fuel costs to customers, the move may boost sales to state electricity retailers that have been cutting back on purchases because of a lack of funds.

Salem, India-based Thriveni and New Delhi-based consortium partner Sainik Mining bid the lowest in the electronic auction, Thriveni Executive Director B. Karthikeyan said, without giving further details. Sainik Mining Director R.S. Sindhu didn’t provide a comment after three requests by phone to his office. NTPC declined to comment.

Production from Pakri Barwadih should begin early in the year starting April 1, two of the people said. The Pakri Barwadih mine is expected to yield NTPC about 310 million metric tons of coal over 25 years. Each ton of coal from the mine would cost the company about 839 rupees, based on the winning bid.

NTPC declined 1.2 percent to 128.05 rupees in Mumbai. The stock has lost 11 percent in value this year, compared with a 1.4 percent gain the benchmark S&P BSE Sensex.

Villager Protest

NTPC, which was allocated Pakri Barwadih among other mines by the government, failed to start the project because of protests by villagers who demanded higher compensation to vacate the land. Last year, it terminated a contract given to a unit of Australia’s Leighton Holdings Ltd. for developing the mine, citing delays.

Thiess Minecs and NTPC have since been locked in an arbitration case over the cancellation. Leighton Holdings changed its name to CIMIC Group Ltd. earlier this year.

Adani Enterprises Ltd., controlled by billionaire Gautam Adani, had also bid for the contract, the people said. An Adani spokesman declined to respond to e-mailed questions.

The company’s shares were little changed in Mumbai.

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