Coal ministry deducts bank guarantee of 3 state PSUs

Block allocated jointly to Mahagenco, two other state-owned firms

The Ministry of Coal has deducted bank guarantee (BG) of Rs 16.65 crore of the Chhendipada block, citing delay in commencement of coalproduction.

The BG deduction is on the basis of recommendation made by an inter-ministerial group mandated to oversee status of allocated coalblocks, and recommend action, including de-allocation if needed.

The Chhendipada and Chhendipada-II coal blocks located in Odisha, were jointly allocated to Maharashtra State Power Generation CorporationLtd (Mahagenco), Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd (UPRVUNL) and Chattisgarh Mineral Development Corporation (CMDC).

Major milestones for the Chhendipada coal mine project like receipt of forest clearance, grant of EMP (environment management plan) clearance, grant of mining lease and land acquisition are still pending. In case of Chhendipada-II coal block, many milestones like mining lease application, submission of mining plan, forest clearance, grant of EMP clearance, grant of mining lease and land acquisition were pending.

The BG deduction follows the showcause notice issued in May, 2012, to the allocatees for delay in development of the coal mine. An investmentof Rs 20.50 crore has been made on the coal mine project by the joint venture company formed by the three state PSUs. In addition, Rs 53.44 crore has been deposited with the state’s nodal agency for land acquisition, Odisha Industrial Infrastructure Development Corporation (Idco).

Taking into account all factors and progress made in development of the coal block, IMG did not recommend the de-allocation of the coal blocks at this stage.

IMG noted that as per terms and conditions of allotment, 50 per cent of the BG is linked to the milestone set for development of the Chhendipada captive coal block and the remaining 50 per cent to guaranteed production, once production commences.

The IMG, however, has not recommended deduction of BG in respect of the Chhendipada-II coal block since it is dependent on development of the Chhendipada block.