Ministry threatens to cancel coal block allotted to mega firms

The coal ministry on Tuesday threatened cancelling allocations of a block being jointly developed by the world’s largest steel maker ArcelorMittal, Reliance Energy, Hyderabad-based Lanco Group, GMR Energy, Navbharat Power and Vedanta subsidiary Sterlite Energy. The ministry is miffed at the delay in the development of the block.

The Rampia and Dip Side of Rampia coal block, located in Mahanadi Coalfields in Orissa, was allocated to the six firms in January 2008 to meet the coal requirement of their captive end use plants. Production from the block was to commence from the block in January this year as per the conditions of the allocation.

“The allocates are hereby warned and directed to develop the block immediately. Any further delay would lead to necessary action including de-allocation of the block,” the ministry said in a warning letter issued to the six firms.

In two review meetings held in June 2009 and July 2010, the ministry noted that no serious efforts have been taken by the companies for the development of the block despite repeated assurances. The ministry also issued two showcause notices to the companies in September 2009 and July 2010 for the delay. The reasons for the delay mentioned by the companies in their reply to the showcause notices were found unconvincing by the ministry.

Similar warning letters were also issued by the coal ministry on Tuesday to Metals and Minerals Trading Corporation (MMTC) for delay in development of Gomia coal block and Jharkhand State Mineral Development Corp for Patratu and Robodih coal blocks. The ministry also threatened Jharkhand State Electricity Board and Bihar State Mineral Development Corporation for delays in the progress of Urma Paharitola block jointly allocated to the two companies in Jharkhand.

In May, a ministerial committee had recommended issuing warnings to 29 coal and three lignite blocks holding companies.

The panel had also suggested cancelling 14 coal blocks and one lignite block awarded to six PSUs, including NTPC and three private firms, for failing to develop the mines. This year, the government has cancelled blocks held by several firms including NTPC, Damodar Valley Corporation and Andhra Pradesh Power Generation Corporation Ltd.Ministry threatens to cancel coal block allotted to mega firms