India Inc bristles at captive coal block cancellations

The government has allocated 218 captive coal blocks with reserves exceeding 49 billion tonne since 1993

Industry is fuming over the government’s move to cancel captive coal mining licences. Having spent Rs 24,000 crore in the development of blocks and end-use projects, companies have started criticising the coal ministry for the “unjustified” move. Those threaten pulling back investment from the infrastructure sector.

The Confederation of Indian Industry (CII) on Thursday said the cancellations were a matter of concern and should be resorted to as a penal measure. “The intent of the government to involve the private sector to invest in infrastructure in the interest of the country and the economy will be defeated if de-allocation is resorted to, without examining the merits of the cases in detail,” President S Gopalakrishnan said.

The government has allocated 218 captive coal blocks, with reserves of 49 billion tonnes (bt), since 1993. Half the reserves have been bagged by private companies. The ministry has cancelled licences of 51 coal blocks in two years on recommendations from an inter-ministerial panel that reviewed the development efforts by companies and found those wanting.

Protests peaked after the latest round of cancellations involving 11 blocks of 18 companies, including Jindal Steel and Power (JSPL), Tata Group, Monnet Ispat & Energy, Steel Authority of India Ltd, Rungta Mines and Birla Corporation. Naveen Jindal-promoted JSPL and Monnet Ispat have invested Rs 9,710 crore in the joint Urtan North block and its associated project; Monnet Ispat and Topworth Steel Rs 6,729 crore in Rajagamar Dipside block; Birla Corp Rs 2,391 crore in its Bikram block; and Sunflag Iron and Dalmia Cement Rs 2,304 crore in Khappa & Extn block in Maharashtra.             

The companies argue the delays are a result of difficulties in obtaining green clearances and land acquisition issues. Monnet Ispat Managing Director Sandeep Jajodia blamed the ministry of breaching the industry’s trust, in an interview on Thursday. “You cannot give coal mines to somebody, push him over the years and when thousands of crores have been invested in the end-use project, cancel the mine for reasons beyond the control of the allottee,” he said.

CII’s Gopalakrishnan said if the delays were mainly on account of state governments or approvals from various ministries when the coal block allottees had taken all the steps, de-allocation was not a justifiable action on part of the government.