Odisha Mining Corporation (OMC) has scrapped the joint venture deal with Delhi-based Sainik Mining & Allied Services Ltd (SMASL) after the state controlled miner faced a barrage of criticism for conceding controlling stake in the joint venture to the private player.
"OMC's deal with SMASL has been scrapped”, said steel & mines minister Rajani Kant Singh.
"The deal with SMASL was scrapped on September 27 this year. We just complied with the government's directive. No reasons were cited for pulling the plug on the deal”, said OMC's chairman and managing director Saswat Mishra.
The state government's decision to cancel the deal with SMASL comes six days after a public interest litigation (PIL) was filed in the Supreme Court on grounds of blatant violation of Coal Mines (Nationalization) Act-1973 by allowing the private player to have controlling stake in a coal mine allocated to a PSU. The petitioner had demanded a CBI probe into the deal.
The state government is understood to be playing safe on the issue of coal blocks and projects linked to coal mining after finding itself in a bind against coal block allocation row.
The equity pattern of the OMC-SMASL joint venture had also drawn flak from the Ministry of Coal which had held OMC guilty of violating the Act by conceding controlling stake to a private player for developing a coal block alloted to a state PSU.
The ministry had issued a showcause notice to OMC in July 2010, urgingthe PSU to raise its stake in the JV company to at least 51 per cent.In addition to this, the ministry had also advised OMC to suitablymodify the Memorandum and Articles of Association of the JV company.
In response, the state Chief Secretary B K Patnaik in a letter toCoal secretary Alok Perti in February this year had informed that OMCin its board meeting had decided to raise its equity in the JV companyto 51 per cent from the existing 26 per cent.
“Before making the necessary amendments in the Memorandum and Articles of Association of the JV company, OMC is examining the agreement in detail, especially the commercial aspects of the pact for which duediligence is required which is being undertaken and is expected to becompleted shortly”, Patnaik had stated in the letter.
He had also informed that OMC through the JV company has taken varioussteps to complete the pre-mining activities in respect of the Utkal-Dcoal block.
With the exception of grant of Stage-II forest clearance,most of the major milestones have progressed satisfactorily.Land acquisition for the coal block area and purchase of private landfor rehabilitation and resettlement (R&R) colony have been completedby June 2007.
The coal block was awaiting Stage-II forest clearance the recommendation for which was sent by the state government to the Union ministry of environment & forests (MoEF) in January 2008.OMC had obtained consent to establish from the State Pollution ControlBoard on November 20, 2007.
Construction of the R&R colony withapproach road and other basic amenities was completed in December 2010 while land acquisition for construction of private railway siding wascompleted in April 2011.
