Coal ministry threatens to cancel OMC's coal block

After issuing a show cause notice to the Orissa Mining Corporation (OMC) for the inordinate delay in development of Utkal-D coal block, the Ministry of Coal has slapped yet another notice on the corporation for delaying the development of the Mahanadi coal block.

The ministry in its dated October 29 has pulled up OMC for the inordinate delay in achieving important milestones for the coal block and directed the corporation to respond to the show cause notice within 30 days. The MoC has even threatened to de-allocate the coal block.

If the company fails to respond to the notice, the ministry would presume that it has no explanation to offer and appropriate action will be taken to de-allocate the said coal block.

OMC authorities could not be reached for comments.

The MoC had allocated the Mandakini-B coal block on July 25, 2007 jointly to OMC, Assam Mineral Development Corporation, Meghalaya Mineral Development Corporation and Tamil Nadu Electricity Board. The coal block was allocated on the condition that all important milestones would be achieved in a timely manner and any slippage would render the allocation liable for cancellation and withdrawal of the block from the allocatee.

In order to expedite the development of the coal block, various review meetings were held from time to time with the representatives of the allocatee companies.

In the review meeting held on June 22-23 last year, it was noted that the companies are lagging behind the normative milestones abruptly as they have not made serious efforts to develop the coal block within the normative milestones.

The companies had then assured to take steps to develop the coal block within the required time frame.

However, in the last review meeting held on July 20-21 this year, it was noticed by MoC that no serious efforts have been made to develop the coal block even after repeated assurances were made by the companies in this connection.

The ministry expressed dissatisfaction on the overall progress of the coal block as critical milestones were still pending. The ministry noted that the companies are non-serious about the development of the coal block.

Land acquisition and grant of forest clearance for the coal block project is still pending.

The companies are yet to file the application for forest clearance. Besides, there was a delay of 21 months in submitting bank guarantee for the coal block.

Moreover, the allocatee companies were yet to submit the Mining Lease Application to the ministry.