Tata's CTL project in limbo

Coal Ministry has slapped showcause notice on North of Arkhapal Srirampur coal block allocated to the project in Odisha

In a setback to the ambitious coal to liquid (CTL) project planned by the Tatas through a joint venture (JV) with Sasol Ltd of South Africa, the Ministry of Coal (MoC) has slapped a showcause notice on North of Arkhapal Srirampur coal block allocated to the project in Odisha.

The ministry’s notice is guided by the recommendation of the inter ministerial group that noted major slippages in timelines in achievement of critical milestones by developers of the CTL block.

MoC has allowed 20 days time to Strategic Energy Technology Systems Pvt Ltd (SETSPL), a JV between a consortium of Tata companies and Sasol of South Africa to respond to the notice.

“You are hereby called upon to showcause on each milestone separately, to this ministry within a period of 20 days from the date of issue of the showcause notice as to why the delay in the development of the coal block should not be held as violation of the terms and conditions of the allotment of North of Arkhapal Srirampur CTL block failing which it would be presumed that your company has no explanation to offer and action as appropriate would be taken against your company for de-allocation of the said coal block,” S K Shahi, director, MoC wrote to managing director, SETSPL.

The ministry has also asked the allocatees to furnish a detailed status note on the progress of end use plant for which the coal block was allocated.

Though the CTL block was allocated to SETSPL in February 2009, major milestones for the coal mine like land acquisition, grant of mining lease, grant of environment management plan clearance and grant of opening permission were still pending. The Coal ministry’s notice reveals that on other milestones like mining lease application, approval of mining plan and grant of forest clearance, the developers slipped on timelines ranging from  one year five months to three years.

The office of the Coal controller conducted field observation of the CTL block in December, 2012. It did not find any presence of mining equipment nor any sign of mining activity. While there was no information on engagement of mine developer cum operator, no escrow account was opened by the developers for mine closure.

The Odisha government had issued prospecting licence (PL) order in March, 2012, for the CTL block. But PL deed was yet to be executed.

Recently, the state government decided to put on hold processing of the two CTL blocks (the other being awarded to JSPL) amid ongoing probe by the Central Bureau of Investigation (CBI). The Central investigative agency has sought file records pertaining to allotment of these two coal blocks from the Planning Commission.

Earlier, the Parliamentary Standing Committee on steel & coal had questioned the basis of allotment of the two blocks to privately run firms instead of state PSUs.

SETSPL had proposed the CTL project at an undecided location in Dhenkanal district at a cost of Rs 45,000 crore. With a production capacity of 80,000 barrels per day, the project promised about 6,400 direct jobs.