MSEB sources told The Financial Express that Crisil has been appointed to prepare a tender document and evaluation. The global tender will be floated by March next year. MSEB or the state government will have either 26 per cent of "goodwill" equity in the proposed SPV while the balance will be held by the private sector.

Such attempt has already been made in West Bengal where Bengal EMTA has been formed comprising West Bengal Electricity Board, WB Power Corporation and EMTA Group. Sources said that the proposed JV in Maharashtra will give a tough competition to the Coal India Ltd, a government of India undertaking. Such a JV is required as these mines couldnot be opened for the existing players mainly Western Coal Fields Ltd (WCL) for exploitation due to high cost of mining. Basically these mines are commercially non-viable considering the present administered price of coal.

In a related development, MSEB has signed a memorandum of understanding with the WCL for supply of coal from mines situated at Adasa (underground mine) in Nagpur district, Kolgaon (opencast mines) in Yavatmal district, Bhatadi (opencast) in Chandrapur district, Ghatrohan (opencast) in Nagpur district and Kamptee (underground) in Nagpur district. WCL will supply coal to MSEB on cost plus/negotiated basis. The coal from these mines will have advantages of less freight charges as compared to the coal to be brought from outside Maharashtra to the tune of around Rs 200 tonnes. At present, of the total requirement of 26 million tonnes of coal per year, MSEB gets 15 million tonnes from WCL and the balance 11 million tonnes from Orissa, Madhya Pradesh and Andhra Pradesh.

According to the MoU,WCL will sign a commercial agreement with MSEB for the commencement of production at Adasa and Kolgaon within a month. The actual production will commence only after 3 to 4 years. WCL said that base operating levels for underground mines will be 75 per cent while it will be 85 per cent for opencast mines. The MSEB has asked WCL to transfer benefit arrived from the excess production. The commencement of these mines will produce 2.5 million tonnes per year and it will ultimately help MSEB save Rs 75 crore. Currently, MSEB has to shell out a whopping Rs 1,800 crore per year towards payment of procurement of coal from WCL and other agencies. Adasa mine has extractable reserves of around 5.7 million tonnes with anticipated life of 25 years. Considering the production level of 0.21 million tonnes (700 tonnes per day) an employment will be made available to 670 persons. The royalty for this mine to the state government will be Rs 1.47 crore per year while capital outlay will be Rs 37.5 crore. Kolgaon mine hasextractable reserves of 4.63 million tonnes with the anticipated life of 14 years. Considering the production level or 0.4 million tonnes (1500 tonnes per day), an employment will be made available to 422 persons. The royalty for this mine will be Rs 2.80 crore per year and the capital outlay will be Rs 60 crore.

Bhatadi mines have reserves of 18.8 million tonnes while Ghatrohna and Kamptee have reserves of 17.3 million tonnes and 13.16 million tonnes respectively. The anticipated capital outlay for Bhatadi, Ghatrohna and Kamptee conversion will be Rs 74.29 crore, Rs 89.57 crore and Rs 96.65 crore respectively.