Karnataka, Punjab drop EMTA as mining development operator

After being rapped by the central government, Karnataka and Punjab power utilities have cancelled the appointment of private firm EMTA (formerly Eastern Minerals & Trading Agency) as the mining development operator (MDO) for the mines allotted to them in the coal auction. The power departments of the two states have also issued fresh tenders to select another MDO.

In the coal allotment process in March, Karnataka Power Corporation Limited (KPCL) was allotted a cluster of mines - Baranj-I to -IV, Kiloni, and Manora Deep - in Maharashtra, while Punjab State Power Corporation (PSPC) got Pachwara Central in Jharkhand. These mines were allotted for the utilities to run their power plants.

In July, KPCL and PSPC appointed EMTA as their MDO to execute the mining of coal for power production rather than selecting the MDO through a tender process. The coal ministry slapped a show-cause notice on these two utilities, seeking an explanation for bypassing the tender route.

Government officials said the guidelines for re-allocation of coal blocks have clearly mentioned that the MDO should be hired through a transparent process. Under the guidelines, "public sector allocattee is allowed to hire MDO for technical assistance in mining. However, joint venture of any kind with a private company is not allowed."

The guidelines also suggested MDOs be selected through a fair and transparent tender process.

EMTA was the MDO for these two state utilities when they owned the coal blocks, allocation of which was cancelled by the Supreme Court (SC) last year. In some cases, while the mine was allotted to the states, the holding stake of the joint venture was with the private MDO. EMTA had a 74 per cent stake in the joint venture with these two state power utilities, when the SC order struck down the arrangement.

Ujjal Upadhayay-promoted EMTA had signed joint ventures with seven states, holding close to 74 per cent share.

The coal reserves were estimated to be close to 1.7 billion tonnes.

EMTA is one of the key accused in the coal scam case for allegedly ignoring the clauses for forming joint ventures and getting pecuniary gains through the arrangement. MDO are supposed to be hired on contract.