Coal ministry cancels three coal blocks of NTPC (media reports) - negative:: Emkay

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Coal ministry cancels three coal blocks of NTPC (media reports) - negative

As per Media Reports, coal ministry has cancelled 3 coal blocks allotted to NTPC - Chatti Bariatu (reserves- 149mn MT), Chatti Bariatu South (400mn MT) and Kerandari (142mn MT). The total reserves for 7 coal blocks allotted to NTPC are 3bn MT, so with cancellation it comes down to 2.3bn MT. NTPC was in the process of inviting bids for development of Chatti Bariatu mine. NTPC’s captive production target is about 50mn MT by FY17E. However, if the mines stand cancelled than the peak production target by FY17E might be affected significantly. Though the cancellation won’t have any negative impact on near term earnings (FY12-13E) but will definitely raise questions on long term fuel security and PAF factor - negative for the stock.