MCL refuses to pay Rs 1,306 cr penalty

Mahanadi Coalfields Ltd (MCL), a subsidiary of Coal India (CIL), has decided not to pay Rs 1,306 crore fine imposed by the Odisha government over allegation of illegal coal mining.

The company has rejected the government missive on the ground that the claim has been raised on wrong legal remises. “The state government has claimed the amount on the basis of Mines and Minerals Development and Regulation Act, but we are governed by a different Act,” Kulamani Biswal, financial director with MCL said.

“MCL has acquired the land on the basis of Coal Bearing Areas (Acquisition and Development) Act and hence, the land ownership lies with us. So the state government cannot claim the amount saying we have violated the rules,” he clarified.

Recently, the state government had asked MCL to pay a penalty of Rs 1,306.6 crore from the profits realised by selling six million tonne coal over and above the approved quantity of five million tonne permitted by the environment authority for the Samalaeswari mine.

The bill was prepared as per the observation of the Deputy Accountant General (R&A), Odisha.

Earlier in November 2011, the Deputy Director of Mines (DDM), Sambalpur circle, had issued a demand notice to MCL for payment of Rs 862.58 crore as fine. The revised bill was sent after the observation of the Comptroller and Auditor General (CAG) regarding the short assessment of cost price of coal mined illegally in the areas not having environment clearance.

The MCL officials, however, denied any illegal mining activity by the state-run miner.

“MCL or CIL has not resorted to illegal mining at any point of time as we produce and supply coal only for national interest. For this particular issue, we had environment clearance for five million tonne and the extra six million tonnes were raised on the basis of terms of reference (TOR) availed from the Ministry of Environment and Forest (MoEF), Government of India, at that point of time,” Biswal said.

TOR enables a project developer to conduct environment impact assessment (EIA), based on which final environment clearance is given.

The brawl between state administration and MCL is not new. The government has several times complained to MCL over coal quality and coal supplies to its power plants, managed by Odisha Power Generation Corporation (OPGC).

Earlier this month, the deputy director of mines, Talcher circle, had served closure notices on nine out of 11 mines of MCL, urging the coal authorities to stop all mining activities including despatch of coal, on the ground that the 'Consent to Operate' issued by the State Pollution Control Board (SPCB) to these mines in Talcher region had expired on March 31.