Govt invokes guarantee for coal block allotted to DVC, TVNL

The ministry said that the bank guarantee to the extent of Rs 15.18 crore be invoked and deposited with the govt

The government today invoked a Rs 15.18 crore bank guarantee given by Tenughat Vidyut Nigam Ltd (TVNL) for failing to develop a coal mine in Jharkhand jointly with Damodar Valley Corporation (DVC).

The Coal Ministry also said in its order the Gondulpara block at North Karanpura is liable for cancellation if its development isn't expedited.

"It is ordered that the bank guarantee to the extent of Rs 15.18 crore be invoked and deposited with the government," the ministry said in a letter to the managing directors of both companies.

The development comes on the heels of the Centre asking NTPC to furnish a Rs 233 crore bank guarantee for delays in mine development in Chhattisgarh and ordering deduction of Rs 2.24 crore from the bank guarantee of AP Mineral Development Corp for failing to start output from Madhya Pradesh mines.

The Gondulpara block, which is under the command area of Coal India, has geological reserves of 166 million tonnes of coal. It was alloted in 2006 to TVNL as leader and DVC as an associate for use in their power projects.

The decision to encash the surety was taken on the basis of recommendations by an Inter Ministerial Group (IMG), which reviewed the progress of coal blocks allotted to private and public sector companies for their own use.

"Keeping in view the fact that more than seven years have elapsed since allotment of the block, IMG recommends for deduction and encashment of bank guarantee as per the terms and conditions of allocation," the panel said in October 2013.

The companies had said the delay was due to time taken by the government for a gazette notification authorising their joint venture company Tenughat EMTA Coal Mines Ltd to develop the block. They also said the area was in a no-go zone, which the Ministry of Environment and Forests had classified as unviable for mining.

The panel, however, observed that the "delay in gazette notification for approval of JV company as mine operator cannot be a ground to justify the delay since formation of JV was optional and this was not a condition of allocation."

The companies also said they had invested Rs 53.23 crore on mine development.

The IMG had earlier issued a show-cause notice to DVC and TVNL, saying the block could be cancelled for unsatisfactory progress.

The Coal Ministry in its letter earlier had said that violation of any of the conditions of allocation would render the mining lease liable for cancellation.