GVK Power gets second warning for delay

Ministry of Coal has issued a warning letter to GVK Power over the inordinate delay in developing Tokisud North coal block in Jharkhand, which was allotted to the company for captive purpose in 2002.

This is a second warning letter to GVK in less than one week. In the first notice issued last week, the Ministry had warned Seregarha Mines Limited, a JV formed by GVK Power and Arcelor Mittal India, over delay in developing Seregarha mines in Jharkhand.

"... With the approval of the competent authority, it has been decided to issue warning of M/s GVK power limited in respect of Tokisud North coal block. The allocatee is hereby warned and directed to develop the block immediately," the notice said.

The coal block was allotted to GVK Power for supply of coal to 2x250 MW Goindwal Sahib thermal based power plant at Taran Taran in Punjab being developed by the company.

"Any further failure in development of the block would lead to necessary action as per the terms and conditions of allocation including de-allocation of the coal block," the notice said.

The ministry in 2008, issued a show cause notice to GVK for which the company assured that the mine will be started during the first quarter of 2010. Further, in the review meeting held in June 2009, the company officials assured to start production by January 2011.

Based on the commitment the Review Committee agreed that if coal production from the block would not start by Jan 2011, the block would be withdrawn.

However, the notice said that it has been noted the company has repeatedly failed to keep its promises made on earlier occasions to the ministry and is thus non-serious about timely development of the block.

The company officials could not be reached immediately for their response.

In May, the government said that the panel set up by the ministry to look into the process of deallocation of coal blocks had recommended issuing warnings to 29 coal and three lignite blocks allocatees.

The panel had also suggested cancellation of 14 coal blocks and one lignite block awarded to six PSUs, including NTPC and three private firms, for failing to develop the mines.

This year, the government has deallocated coal blocks of various firms, including NTPC, Damodar Valley Corporation, Jharkhand State Electricity Board, Baidyanath Ayurved Bhavan, Andhra Pradesh Power Generation Corporation Ltd, and Bhatia International Ltd.