Govt serves notice on GVK, Bhushan Steel over coal blocks

The government today said it has issued showcause notices to GVK Power and Bhushan Steel and Power for their failure to develop coal blocks awarded to them within the timeframe stipulated in the mining agreements.

The notices, which say that both the companies have failed to adhere to commitments made to the government to develop their respective coal blocks, come as part of the Coal Ministry's efforts to weed out "non-serious" companies that have procrastinated development of allocated captive blocks.

Neither company was available for an official comment.

On Wednesday, the government had issued showcase notices to three firms -- Monnet Ispat, Chhattisgarh Mineral Development Corporation and Utkal Coal -- for similar reasons.

It has also prepared a list of 81 such "non-serious" firms, who were alloted captive blocks long back.

GVK Power (Govindwal Sahib) was issued a showcause notice for its failure to develop the Tokisud North coal block in Jharkhand for supply of coal to a proposed 500-MW power plant.

Similarly, Bhushan Steel and Power was issued a notice for non-development of its Jamkhani coal block in Orissa, which was awarded with the purpose of facilitating 2.6 million tonnes per annum (MTPA) of coal supply for a sponge iron plant and captive power unit.

"The company has repeatedly failed to keep it promises made on earlier occasions to this ministry and thus appears to be non-serious about timely development of the block," the notices said.

The ministry said that if the companies do not reply to the notices in a month's time, "It would be presumed that your company has no explanation to offer and action as appropriate would be taken against your company for deallocation of the said block."

The coal ministry noted that the companies have cited problems with land acquisition, or failure to get clearances, among other reasons, as being responsible for their non- adherence to contractual commitments.

In July, the ministry had convened a review meeting with the concerned companies, which have been allocated a total of 207 coal blocks for captive use in power, cement and steel projects.

India produced about 532 million tonnes of coal in 2009-10 and aims to cross the 600 million tonnes mark in 2010 -11. However, the demand-supply gap is likely to be in the range of 80 million tonnes in the current year.

In a previous drive, the government had deallocated 11 coal blocks.