Private mining development operator EMTA (formerly Eastern Minerals & Trading Agency) has dragged the state-owned power companies of Punjab and Karnataka to court after its appointment as mining development operator (MDO) was struck down by both the states.
In the coal allotment process held in March, Karnataka Power Corporation Limited (KPCL) was allotted a cluster of mines — Baranj I to IV, Kiloni & Manora Deep in Maharashtra — while Punjab State Power Corporation (PSPC) got the Pachhwara Central mine in Jharkhand. These mines were allotted for power plants. In July 2015, KPCL and PSPC directly appointed Ujjal Upadhayay-promoted EMTA as MDO instead of using the tender route. The coal ministry slapped a showcause notice on the two utilities for bypassing the tender route.
The coal block allocation guidelines suggest that MDOs be selected through a fair and transparent tender process.
In November-December last year, KPCL and PSPC had started a tendering process to select an MDO. But, EMTA went to the high courts concerned asking for right of first refusal from the state utilities.
The matter is sub-judice at the High Court of Punjab and Haryana. But, a Bench in the Karnataka High Court had agreed with EMTA’s claim. The Karnataka government and KPCL, then, appealed against the ruling and the matter is now being heard.
EMTA was the MDO for these two state utilities when these owned coal blocks before the Supreme Court cancelled the allocations in August 2014. While the mine was allotted to a state, the holding stake of the joint venture was with MDO, a private entity. EMTA had a 74 per cent stake in the joint venture with these two state power utilities, when the apex court struck down the arrangement.
EMTA, formerly known as Eastern Mineral & Trading Company, held the second largest tranche of coal blocks as their MDO when they were allocated earlier through a screening committee route. Ujjal Upadhayay-promoted EMTA signed joint ventures with around 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 joint ventures and getting pecuniary gains through the arrangement. MDO were supposed to be hired on contract.
THE STORY SO FAR
August 2014: Supreme Court strikes down any coal mining arrangement between states and private companies except on contractual basis
October 2014: Ministry of coal initiates new coal mine auction under the newly-drafted Coal Mining (Special Provisions), Act 2015
March 2015: Punjab is allotted one mine and Karnataka a cluster of four mines
July 2015: Both Punjab and Karnataka appoint EMTA as their MDO without any transparent bidding process
September 2015: Coal ministry strikes down the arrangement, asks states to conduct tender process to select MDO
- December 2015: EMTA drags both states to court asking first right of refusal over MDO cancellation
Digging up controversy
Appointment of mining development operator in Punjab is embroiled in more than one legal case. The companies in the fray are Adani Mining, BGR Construction, Sainik Mining, Thriveni Earthmovers and EMTA, and have moved court against each other. Speaking to Business Standard, sources in the Punjab government said, “Initially, five players — Adani Mining, BGR Construction, Sainik Mining, Thriveni Earthmovers and EMTA — submitted their technical bids. Out of the total bidders, Thriveni Earthmovers was declared ineligible, while the rest of them were eligible. We were supposed to open the financial bid on February 11.”
However, Thriveni Earthmovers has challenged the government’s decision. According to the official, BGR has also raised questions over Sainik Mining being declared eligible. “With EMTA’s case already in the court, regarding the right of first refusal, we would now face three hearings in the Punjab and Haryana High Court on February 10.”