The Coal Controller Organisation (CCO) under the coal ministry has recommended deducting bank guarantees totalling Rs 232 crore deposited by captive miners for delays in production. The recommendation, part of the block development status update report of CCO as on March 2012, covers 16 blocks not developed on time.
The companies that face the deduction include Bhushan Steel (Rs 69.3 crore), Tata Steel (Rs 14.2 crore), JSW Energy, JSW Steel and Shyam Metalliks (Rs 55.6 crore), Adhunik Alloys and Electro Casting (Rs 28 crore), Tat Sponge (Rs 16.2 crore) and Jindal Steel and Power (Rs 7 crore). The blocks covered in the report include Moitra and Panchmo in Jharkhand, Marki Mangli in Maharashtra, Utkal A in Odisha and Rawanwara North in Madhya Pradesh.
The government has allotted 218 blocks beginning 1993 but production has begun only in 30 of them. However, bank guarantee could not be forfeited in even a single case as the guidelines for deducting bank guarantee in case of delays were not ready, according to the coal ministry.
However, an inter-ministerial panel had earlier this month finalised the norms for deducting bank guarantees in such cases. The fact that the move comes two decades after the first coal block was allotted in 1993 and seven years after the system of bank guarantee was introduced, has led Opposition parties allege foul-play in allocation of coal acreages.
Opposition parties have also demanded scrapping all 142 blocks that have come into production since 2004. More than Rs 846 crore has already been spent by companies in developing the 16 blocks covered in the CCO report.
The system of bank guarantee was first introduced in 2005 for private companies and in 2007 for Central or state utilities. Under the norms, the company awarded a block is required to submit a bank guarantee equal to one year’s royalty amount based on mine capacity as assessed by Central Mine Planning and Design Institute within three months of the issue of allotment letter.
Half of the bank guarantee amount is linked to the achievement of milestones before production begins and the other half to guaranteed production.
The Comptroller and Auditor general of India’s report tabled in Parliament last month had pulled up the government for not having finalised the norms which led to the lapse of bank guarantees that could have been forfeited. The report had pegged the lapsed bank guarantee amount at Rs 311.8 crore against 15 blocks.