The Union government has threatened five companies that their coal block allocations could be cancelled. The companies are three OP Jindal Group firms, a Coal India subsidiary, Mahanadi Coalfields and the Kolkata-based Shyam DRI. The three firms of the OP Jindal Group which have been pulled up by the ministry are JSW Steel, Jindal Thermal Power Company and Jindal Stainless Steel.
The move is in response to the failure of these companies to develop two blocks allotted to them five years ago, despite repeated reminders. The coal ministry has issued showcause notices to the five companies, asking them to explain, within a month the reasons for the delay in the development of Utkal-A and Gopal Prasad West blocks and why the delay should not be considered a violation of the terms and conditions of the allotment of the blocks. The notice further threatens de-allocation of the blocks in case the companies fail to offer an explanation.
The five firms were jointly allocated the two coal blocks in late 2005. “It is seen that the (joint venture) company has repeatedly failed to keep its promises made on earlier occasions and, thus, is non-serious about timely development of the block,” the notice states.
The ministry is also miffed at the failure of the JV company set up to develop the blocks – MJMJ Coal – to submit the bank guarantee of Rs 111.2 crore so far, which should have been given by February 2006.
“The allottee company neither developed the coal block nor submitted the required bank guarantee within the stipulated time as per conditions of the allocation letter,” the ministry noted.
The notice further states even critical milestones for the development of the block, including forest clearance and land acquisition, have also not been met by the JV company so far. Slow or no development of captive coal blocks allotted to several companies has been cited by the government in the past as a major reason for the increasing gap in the demand and supply of coal in the country.
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The current overall production of the dry fuel, at 550 million tonnes annually, falls way short of the demand which is increasing at an annual rate between 10 and 30 per cent across different sectors in the country. While the government has allocated more than 207 coal blocks so far, production has commenced from only 26 of these.
The ministry has prepared a list of 81 firms, from both public and private sectors, which are being issued showcause notices for delays in development of blocks.