Govt asks NTPC for bank guarantee after mine delay

IMG after assessing the work has said that there have been delays in achieving milestones

The government has ordered power major NTPC to furnish a Rs 233 crore bank guarantee to expedite development of a coal block in Chhattisgarh and said failure to submit the surety may result in cancellation of the mine. The Talaipalli block in Mand Raigarh region of the state was allocated to the state-run electricity producer in January 2006 to supply coal to the 4,000 MW Lara Super Thermal Power Project. NTPC has spent Rs 1,464.5 crore on the project, including Rs 325 crore on development of the mine.

"Allocatee company is directed to submit the bank guarantee of Rs 232.848 crore to Coal Controller's Organisation immediately, failing which appropriate action would be taken, including de-allocation of the block," the Coal Ministry said in a note to NTPC Chairman & Managing Director Arup Roy Choudhury.

The amount was calculated on the basis of one year royalty. The decision was taken based on the recommendations of an Inter Ministerial Group (IMG) that reviewed the progress made on coal blocks allotted to private and public sector companies for their own use. The IMG, after assessing work on the block in October 2013, had said.

"There have been delays in achieving milestones." The panel recommended procuring a bank guarantee to expedite the project, saying that environment clearance and first-stage forest clearance had been granted for the mine, which was scheduled to open in February 2011.

It said the transfer of some land by the state government and second-stage forest clearance were pending. The IMG had earlier issued a show-cause notice to NTPC, saying the block could be cancelled for unsatisfactory progress. Coal production from the block is now targeted to start in September. The Coal Ministry in its letter said one of the conditions of allotment of the block was that the power project using coal from this mine would start generation latest by the end of the 11th Five Year Plan (March 2012).

It also said violation of any of the conditions of allocation on the part of NTPC would render the mining lease liable for cancellation. The company said progress on the mine had been hindered by delays in land transfer by the state government and the Lara power project is scheduled to start in 2016-17. The block has geological reserves of 1,267 million tonnes of coal, including mineable reserves of 844 million tonnes.