6 big cos warned over delay in mining coal block

The government has issued a stern warning to a consortium of six corporates -- Vedanta's Sterlite Energy, Lanco, GMR Energy, Reliance Energy, Essar Group's Navabharat Power and ArcelorMittal -- that it will cancel the coal block if it fails to develop the same at the earliest.

Besides, the Coal Ministry has also issued notices to four other firms -- MMTC, Jharkhand State Mineral Development Corporation (JSMDC), Jharkhand State Electricity Board (JSEB) and Bihar State Mineral Development Corporation (BSMDC) for not beginning the production from the coal blocks.

"The allocatees are hereby warned and directed to develop the block immediately. Any further failure in development of the block would lead to cancellation of the coal block," the ministry said in a letter to the consortium and others.

Rampia and Dip side of Rampia coal block in the command area of Mahanadi Coalfield, Orissa was allocated to the consortium in January 2008 to meet the coal requirements for their captive use in their specified end use projects.

The six industrial houses had formed a joint venture firm, Rampia Coal Mine and Energy (RCMEPL), to develop the block.

RCMEPL could not be reached for its comments on the development.

Earlier, the consortium had sought the Centre's intervention to expedite regulatory clearances for development of the block.

"RCMEPL is unable to commence drilling and adhere to the milestones and has requested Coal Ministry to impress upon the Orissa government and advise them for clearing our PL [prospecting licence] application expeditiously," the consortium had said in a letter to the ministry.

However, the ministry said in its recent letter, "The reply was considered by the review committee and reasons given for the delay were not found convincing. Therefore, with the approval of competent authority it has been decided to issue warning to RCMEPL."

The block has an estimated 645 million tonne of reserves. While ArcelorMittal has 13.5% stake in it, the remaining partners have about 17.5% stake each.

Earlier, on November 4, the Coal Ministry had issued a showcause notice to the consortium for delays in development of Rampia and Dip side of the coal block.

The ministry, in its notice, had said the firm has repeatedly failed to keep its promises and is thus, not serious about timely development of the block.

The notices are part of Coal Ministry's exercise to weed out non-serious players from the field.

The other companies, too, have been warned against delaying the development of coal blocks. MMTC was allocated Gomia coal block in Jharkhand, while JSEB and BSMDC were jointly allocated Urma Paharitola block in the state. JSMDC was allotted Patratu and Robodih OCP coal blocks in the state.

The coal ministry in May had said that the panel set up by it to look into the process of de-allocation of coal blocks had recommended issuing warnings to 29 coal blocks and three lignite blocks allocatees for bringing their production at the earliest.

It has cancelled 14 coal blocks and one lignite block to six PSUs, including NTPC, and three private firms for failing to develop the mines.