Govt threatens to cancel coal block allocations

Tata Steel, Jindal Steel and Power (JSPL), GVK Power, Essar Power, MMTC Ltd and NTPC Ltd face the threat of cancellation of their captive coal block allocations. The coal ministry will issue showcause notices to these companies, asking why their allocations should not be cancelled.

“The coal ministry has decided to issue showcause notices to various companies for not making sincere efforts for the development of these blocks in the past several years,” a statement issued by the ministry said.

The decision to issue showcause notices to the companies that have been issued several reminders in the past was taken at a high-level meeting in the ministry today.

Of the 93 coal blocks where development has not been satisfactory, 45 belong to public sector companies and the rest to the private sector. All the four lignite blocks belong to private players.

The power, steel and cement industries are heavily dependent on coal for their fuel needs. The current overall production of the dry fuel, at 550 million tonnes annually, falls way short of the demand, which is increasing at an annual rate between 10 and 30 per cent across different sectors in the country. While the government has allocated more than 207 coal blocks so far, production has started from only 26.

The gap in the demand and supply of coal is projected to go up to 82 million tonnes by the end of the current Plan period in 2012, when the annual demand reaches 713 million tonnes. India’s steel sector would alone demand 68 million tonnes of coal in 2012, while the supply is likely to be only 26 million tonnes, according to the projections of the Planning Commission.