Coal ministry threatens to de-allocate UCL's block

The coal ministry had allocated the Utkal-C block, with reserve of 196.3 million tonne, to Indian Metals & Ferro Alloys

The Ministry of Coal (MoC) has issued a show-cause notice to Utkal Coal Limited (UCL) for delay in developing a coal block allotted to it.

The MoC has given 20 days to respond to the notice. The ministry is likely to de-allocate the coal block if UCL failed to provide a satisfactory reply. The MoC has asked UCL to furnish a detailed status of its end-use plant. UCL is a special purpose vehicle formed by the Indian Metals & Ferro Alloys Ltd (IMFA), an integrated ferro alloys producer based in Odisha.

“You are, hereby, called upon to show cause on each milestone separately to this ministry within a period of 20 days from the date of issue of this show-cause 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 allocation of Utkal-C coal block, and why the block should not be de-allocated, 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 block,” S K Shahi, director, MoC wrote to UCL.

The show-cause notice to UCL is on the basis of recommendation by the inter-ministerial group (IMG). The IMG, headed by additional secretary (coal), is mandated to oversee development of allocated coal blocks and recommend action, including de-allocation, if required.

The IMG, in its 22nd meeting held on October 22 last year, considered the status of development of Utkal-C coal block prepared by the Coal Controller’s Organisation. It said no significant progress has been made by the company towards development of the coal block. The MoC had allocated the Utkal-C coal block, with reserve of 196.3 million tonne, to IMFA on May 29, 1998 for a captive power plant (CPP) at Choudwar near Cuttack.

According to a status report submitted by the company with the Coal Controller’s Office, Rs 155.9 crore has been paid towards land acquisition cost of the mining lease area and site of rehabilitation & resettlement (R&R). Mining from the block is expected to begin by the end of this month but grant of mining lease from the Odisha government is pending.