PIL in Supreme Court on OMC-Sainik Mining deal

At a time when the controversy surrounding coal block allocations has caught both the Centre and coal bearing states in a bind, state run miner Odisha Mining Corporation (OMC) has found itself in the soup over its deal with Delhi-based Sainik Mining & Allied Services Ltd (SMASL).

A public interest litigation has been filed in the Supreme Court over OMC’s contentious deal with SMASL for developing the Ukal-D coal block, with reserve of 138 million tonnes, wherein 74 per cent stake in the joint venture has been conceded to the private player.

The petitioner has demanded a CBI probe into the deal, citing blatant violation of Coal Mines (Nationalisation) Act-1973.

OMC authorities could not be reached for comments on the matter.

The equity pattern had also drawn flak the Ministry of Coal which had held OMC guilty of violating the Act by conceding controlling stake to a private player for developing a coal block alloted to a state PSU. The ministry had issued a showcause notice to OMC in July 2010, urging the PSU to raise its stake in the JV company to at least 51 per cent.

In addition to this, the ministry had also advised OMC to suitably modify the Memorandum and Articles of Association of the JV company.

In response, the state Chief Secretary B K Patnaik in a letter to Coal secretary Alok Perti in February this year had informed that OMC in its board meeting had decided to raise its equity in the JV company to 51 per cent from the existing 26 per cent.

“Before making the necessary amendments in the Memorandum and Articles of Association of the JV company, OMC is examining the agreement in detail, especially the commercial aspects of the pact for which due diligence is required which is being undertaken and is expected to be completed shortly,” Patnaik had stated in the letter.

He had also informed that OMC through the JV company has taken various steps to complete the pre-mining activities in respect of the Utkal-D coal block. With the exception of grant of Stage-II forest clearance, most of the major milestones have progressed satisfactorily. Land acquisition for the coal block area and purchase of private land for rehabilitation and resettlement (R&R) colony have been completed by June 2007.

The coal block was awaiting Stage-II forest clearance the recommendation for which was sent by the state government to the Union ministry of environment & forests (MoEF) in January 2008.

OMC had obtained consent to establish from the State Pollution Control Board on November 20, 2007. Construction of the R&R colony with approach road and other basic amenities was completed in December 2010 while land acquisition for construction of private railway siding was completed in April 2011.