The West Bengal government is buying coal from its own mines, Bengal EMTA Coal Mines, and is paying 132% more than current rates. The coal ministry allotted Tara East and West blocks to the state government in 1996 to secure coal supply for its Bakreswar Thermal Power Project.

However, a sand supplier to Coal India Ltd?s subsidiary Eastern Coal Fields Ltd (ECL)?Eastern Mineral Trading Agency (EMTA)?formed a joint venture with the state-owned West Bengal Power Development Corporation (WBPDCL) and Durgapur Projects Ltd. Called Bengal EMTA Coal Mines Ltd, the JV was formed with a paid up capital of Rs 5 crore, in 1996.

EMTA gave 20% stake to WBPDCL holding and 6% to DPL, against which both the government companies earn a dividend at present.

According to sources, the least known EMTA, run by Ujjwal Upadhyay, was ?favoured? by former chief minister Jyoti Basu as Upadhyay was a friend of his son Chandan Basu.

Now, WBPDCL is paying Rs 880 a tonne for coal against Rs 350 a tonne via contract mining. According to the terms of agreement between the state government and EMTA, WBPDCL buys coal at a price which is 19.5% less than Coal India?s notified price of Rs 1,100 a tonne. Hence, coal from EMTA costs Rs 880 a tonne.

It is to be noted if the government retained the mine and opted for contract mining, the cost of coal would have been Rs 350 per tonne , including transport.

According to WBPDCL chairman S Mahapatra, cost of coal accounts for 70% of the power generation cost. WBPDCL requires 20 million tonne coal per year of which 4 mt comes from Bengal EMTA.

Buying coal at Rs 350 per tonne would have inevitably lowered generation tariff, which is Rs 2 on an average and translates to Rs 3.35 when it comes to distribution to domestic and industrial consumers. Asked why the government is paying more, West Bengal ?s power secretary Sunil Mitra said the government was thinking of fixing a new rate. She admitted that the process was incomplete as of now.

?WBPDCL was given 15% of the dividend in 2007-08 with net profit at Rs 1.65 crore,? says Purojit Roy, Bengal EMTA CFO.

According to EMTA sources, the company, still unlisted, had never been clear with its financials. It has huge plans in power business though, they add. Bengal EMTA lifts coal from Tara East and West blocks with an overburden removal varying between 2 and 4 cubic meters. The depth at which coal is available varies between 35 and 50 meters, Roy said.

However, according to a mining contractor engaged by Eastern Coal Fields Ltd, mining between Rs 110 and Rs 300 per tonne with overburden removal varying between 1 and 4 cubic meters. Also, coal is lifted from a depth ranging between 32 and 60 meters.

Sources said EMTA subsidiary Ujjwal Transport Ltd is currently doing contract mining at ECL collieries at an average of Rs 130 per tonne.

According to Mitra, the current price takes into account the investment EMTA made for acquiring the land, prospecting the block, giving relief and creating transport infrastructure. However, according to state power department officials, no investment had to be made for acquiring the land, prospecting and giving relief and rehabilitation as Tara blocks were closed mines of Eastern Coal Fields Ltd. The mines were closed for safety reasons and were directly transferred to Bengal EMTA.

?In fact, nothing of technological upgradation has been done to ensure safety and security of the miners,? a mining expert said.

While Bengal EMTA did not disclose the investment it made for developing Tara blocks, according to ECL sources, ESSEL mining that quoted Rs 331 for lifting a tonne coal for eight years against investing Rs 8,000 crore to develop the Rajmahal block from a 10mt coal producing mine to 17mt producing mine, was not allotted the block even after winning the bid in latter half of 2007. The coal ministry cited ESSEL?s rate to be exorbitant.

Tara blocks have a much smaller production area (4mt per annum), sources said.

EMTA Group has also formed JVs with Punjab State Electricity Board and Karnataka State Electricity Board for supplying coal to their generating utilities.

Short-circuit

• Eastern Mineral Trading Agency (EMTA) formed a JV with the state-owned West Bengal Power Development Corporation(WBPDCL) and Durgapur Projects Ltd

• According to the terms of agreement between the state government and EMTA, WBPDCL buys coal at a price which is 19.5% less than Coal India?s notified price of Rs 1,100 a tonne. Hence, coal from EMTA costs Rs 880 a tonne

• It is to be noted if the government retained the mine and opted for contract mining, the cost of coal would have been Rs 350 per tonne , including transport