Coal Min asks MAHAGUJ to furnish a BG of Rs 269 cr for coal blocks in Odisha

Sets deadline of June 1; threatens de-allocation of coal blocks in case of non compliance

Coal Ministry has served an ultimatum to MAHAGUJ Collieries- a joint venture between Maharashtra State Power Generation Company (MahaGenco) and Gujarat State Electricity Corporation Ltd (GSECL) to furnish bank guarantee of Rs 268.80 crore by June 1 or face de-allocation of Mahanadi and Machakata coal blocks allocated in 2006 in Odisha. MAHAGUJ has been asked to furnish the bank guarantee to the Coal Controller’s Organization.

Coal ministry in its communication dated March 1 to MAHAGUJ said “Inter Ministerial Group (IMG) noted that the allocatee has now completed exploration and is in a position to take steps for the development. As per the terms and conditions of allocation any slippage pertaining to the period of 27 months allowed for exploration would render the allocation liable for cancellation and withdrawal of block from any allocate. However, IMG did not consider it appropriate to recommend de-allocation of the coal block at this juncture and recommended that the allocate may be permitted to continue holding the block only on submission of bank guarantee equivalent to one year royalty for adherence to milestones.”  The coal ministry said during its presentation to IMG the MAHAGUJ had argued that the entire delay was not attributable to them and assured to open the mine by April 2014 against the normative date for start of production of August 6, 2009.

Even though six years and nine months have elapsed MAHAGUJ could not kick off coal production largely due to the strong opposition from locals for acquisition of 3,000 hectare land and lack of environment and forest clearances in the absence of public hearings.

These two coal blocks have a coal reserves of 1,400 million tons to produce 30 million ton annually. As per the joint venture agreement, Maharashtra is entitled to get 18 million ton of coal annually and 12 million ton by Gujarat. So far MAHAGUJ, which has appointed Adani Enterprises as mine developer, has so far incurred an expenditure of Rs 155 crore.

MAHAGUJ official told Business Standard “We will examine the coal ministry’s communication and decide future course of action. In fact due to the growing opposition from villagers against the coal mining, we have last week dispatched a letter to Prime Minister seeking his intervention for an early resolution. We have requested the Prime Minister to urgently convene a joint meeting of the chief ministers of Maharashtra, Gujarat and Odisha so that MAHAGUJ will be able to proceed further.” The official informed that the coal from these blocks would quite handy to both MahaGenco and GSECL especially when they are in the midst of carrying out capacity addition. MahaGenco has invested Rs 8.205.06 crore on the end use power plants while Rs 2,574.30 crore by GSECL.