Odisha Mining Corporation (OMC) has scrapped the joint venture deal with Delhi-based Sainik Mining & Allied Services Ltd (SMASL) after the state controlled miner faced a barrage of criticism for conceding controlling stake in the joint venture to the private player.
“OMC’s deal with SMASL has been scrapped,” said steel & mines minister Rajani Kant Singh.
“The deal with SMASL was scrapped on September 27 this year. We just complied with the government’s directive. No reasons were cited for pulling the plug on the deal,” said OMC’s chairman and managing director Saswat Mishra.
The state government’s decision to cancel the deal with SMASL comes six days after public interest litigation (PIL) was filed in the Supreme Court on grounds of blatant violation of Coal Mines (Nationalization) Act-1973 by allowing the private player to have controlling stake in a coal mine allocated to a PSU. The petitioner had demanded a CBI probe into the deal.
The equity pattern of the OMC-SMASL joint venture had drawn flak from the Ministry of Coal which had held OMC guilty of violating the Act by conceding controlling stake to a private player for developing a coal block allotted to a state PSU.
The ministry had issued a showcause notice to OMC in July 2010, urgingthe PSU to raise its stake in the JV company to at least 51 per cent. In addition to this, the ministry had also advised OMC to suitably modify the Memorandum and Articles of Association of the JV company.
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In response, the state Chief Secretary B K Patnaik in a letter to Coal secretary Alok Perti in February this year had informed that OMC had decided to raise its equity in the JV company to 51 per cent from the existing 26 per cent.
“Before making the necessary amendments in the Memorandum and Articles of Association of the JV company, OMC is examining the agreement in detail, especially the commercial aspects of the pact for which due diligence is expected to be completed shortly,” Patnaik had stated in the letter.
He had also informed that OMC through the JV company has taken various steps to complete the pre-mining activities in respect of the Utkal-D coal block.
With the exception of grant of Stage-II forest clearance, most of the major milestones have progressed satisfactorily. Land acquisition for the coal block and purchase of private land for rehabilitation and resettlement (R&R) colony have been completed by June 2007. The coal block was awaiting Stage-II forest clearance. OMC had obtained consent to establish from the State Pollution Control Board on November 20, 2007. Construction of the R&R colony with approach road and other basic amenities was completed in December 2010.