Coal ministry threatens to de-allocate Utkal-C block

The Ministry of Coal (MoC) has issued a showcause notice to Utkal Coal Ltd (UCL) for slow progress in development of the Utkal-C coal block. UCL is a special purpose vehicle formed by Indian Metals & Ferro Alloys Ltd (IMFA), an integrated ferro alloys producer based in Odisha.

The MoC has allowed 20 days' time to reply to the showcause, explaining the reasons for the delay in development of the coal block. The ministry has even threatened to de-allocate the coal block if the company has no suitable explanation to offer. The MoC has asked the allocatee to furnish the detailed status of its end-use plant.

"You are hereby called upon to showcause on each milestone separately to this ministry within a period of 20 days from the date of issue of this showcause as to why the delay in the development of the coal block should not be held as violation of the terms and conditions of the allocation of Utkal-C coal block and why the block should not be de-allocated failing which it would be presumed that your company has no explanation to offer and action as appropriate would be taken against your company for de-allocation of the said block," S K Shahi, director, MoC wrote to UCL.

The showcause notice to UCL is on the basis of recommendation by the inter-ministerial group (IMG). The IMG headed by additional secretary (coal), is mandated to oversee development of allocated coal blocks and recommend action, including de-allocation, if required. The IMG in its 22nd meeting held on October 22 last year considered the status of development of Utkal-C coal block prepared by the Coal controller's organisation.

It noted that no significant progress has been made by the company towards development of the coal block. The MoC had allocated the Utkal-C coal block, with reserve of 196.34 million tonne, to IMFA on May 29, 1998, for a captive power plant (CPP) at Choudwar near Cuttack. According to a status report submitted by the company with the Coal controller's office, Rs 155.90 crore has been paid towards land acquisition cost of the mining lease area and site of rehabilitation & resettlement (R&R).