Coal Ministry issues show-cause notices to JSPL, Gagan

Taking ahead its drive against companies sitting idle on mines, the Coal Ministry today slapped fresh show-cause notices on Jindal Steel and Power Ltd (JSPL) and Gagan Sponge for delays in developing the blocks.

"You are hereby called upon to show cause, on each milestone separately, to this Ministry within a period of 20 days...As to why the delay in the development of the coal block should not be held as violation of the terms and conditions of the allotment...Failing which...Action as appropriate would be taken against your company for deallocation," the Ministry said in fresh notices to firms.

The development comes on the heels of CBI lodging an FIR recently against JSPL and Gagan Sponge Iron Ltd, also a firm belonging to Congress MP Naveen Jindal, on bagging the Amarkonda Murgadangal coal block in Jharkhand by alleged misrepresentation of facts.

As per the notice, both the firms have been issued show- cause notices for failing to develop Amarkonda Murgadandal coal block, alloted in January 2008.

In the notice, the Coal Ministry said that the companies had failed to meet the milestones set for development of mines and production from these blocks.

"One of the conditions of allocation was that coal production from the captive block shall commence within 36 months in case of opencast mine and in 48 months in case of underground mines," it said.

The progress was found unsatisfactory in review meetings and an Inter-Ministerial Group (IMG) was constituted in June 2012 to look into the matter, it added.

It also said that the IMG in its meeting on May 1 found "no significant progress in development of coal block" and "noticed that a number of important/critical milestones are pending".

The Ministry has also sought a detailed status note on the progress of end use plant by firms.

Head of External Affairs at JSPL, Manu Kapoor had earlier said: "JSPL, as a law abiding company, is governed by a strong ethical code of conduct. This is an ongoing CBI investigation into coal block allocation. At this stage of investigation, JSPL is committed to fully cooperate with CBI."

The crackdown is part of the government's exercise to ensure that the allocated blocks do not remain unproductive and the Ministry has already issued show-cause notices to 30 firms, including SAIL, JSPL, Monnet Ispat, NTPC and GVK Power last month for not developing the mines.

Last year, CAG in a report had estimated likely financial gains of Rs 1.86 lakh crore to accrue to private firms on account of mines allocation without auction.

The captive coal block allocation issue took political overtures and CBI is also investigating it.

Last year, in a similar exercise, the government had issued show-cause notices to 58 coal block allocattees and deallocated blocks of some developers. It also deducted bank guarantees for some others.