The Union ministry of coal has issued showcause notices to Karnataka and Punjab power utilities which were allotted coal blocks for unauthorised appointment of a mining development operator (MDO).
Karnataka Power Corp-oration Limited (KPCL) and Punjab State Power Corp-oration Limited (PSPCL) appointed EMTA (formerly Eastern Minerals & Trading Agency) as their MDO to execute the mining of coal for power production rather than selecting through a tender process.
EMTA was also the MDO for these two state utilities when they owned the coal blocks, allocation of which was cancelled by a Supreme Court order in August last year. "We have asked the state to provide an explanation for taking such step. The guidelines for re-allocation of coal blocks have clearly mentioned that the MDOs are to be hired through a transparent process," said a senior coal ministry official.
The Union government is also planning to issue advisory guidelines for appointment of MDOs this week. Under allocation guidelines, "public sector allocattee are allowed to hire MDOs for technical assistance in mining. However, a joint venture (JV) of any kind with a private company is not allowed." The guidelines also suggested MDOs be selected through a fair and transparent tender process. However, KPCL and PSPCL decided to appoint an EMTA as their MDO.
In some cases, while the mine was allotted to the states, the holding stake of the JV was with the private MDO. EMTA had around 74 per cent stake in the joint venture with these two state power utilities, when the Supreme Court order struck down the arrangement.
EMTA held the second largest tranche of coal blocks as MDO when it was allocated earlier through a screening committee route. Ujjal Upadhayay promoted EMTA signed JVs with seven states and held close to 74 per cent share. The coal reserves were estimated to be close to 1.7 billion tonne. EMTA is one of the key accused in the coal scam case for allegedly ignoring the clauses for forming JVs and getting pecuniary gain through the arrangement. MDO was supposed to be hired on contract.
The MDO appointment guidelines are suggestive and not mandatory, the government would come out with a proper advisory on MDOs. "We will issue suggestive guidelines, which are not mandatory on the states, to follow but abiding by these would prevent any legal ire or tussle later," said a ministry official.
KPCL was allotted a cluster of mines - Baranj I-IV, Kiloni and Manora Deep in Maharashtra - and PSPCL got Pachwara Central in Jharkhand. These mines would help the state power utilities run their power plants.