Odisha flays Centre for de-allocation of OMC coal block

The decision to de-allocate Utkal-D coal block given to Odisha Mining Corporation (OMC), a state owned public sector undertaking (PSU), shows the central government’s intention to block industrialisation in Odisha, said Rajnikant Singh, state steel and mines minister.

“The de-allocation decision shows the central government has no sympathetic view even on state PSUs. It means the Centre does not support our view to allocate all blocks to the state owned miner. It is a clear sign that the Government of India does not want industrialisation in Odisha,” he said.

After the coal block row, Odisha had requested the central government to reserve coal fields inside its territory exclusively for its PSU, he added.

 

The inter-ministerial group (IMG) at the Centre, formed in July this year after coal scam row to scrutinise the status of allocated coal reserves, in November recommended to de-allocate eight coal blocks given to PSUs citing delay in developing the coal fields.

A formal letter was written to OMC on November 30 by the Coal Ministry.

Utkal-D coal block in Odisha was allotted to OMC in December 2003, after which the state-run miner had joined hands with Delhi-based Sainik Mining & Allied Services Ltd (SMASL) for coal mining in the state. Both the companies had formed a JV named Kalinga Coal Mining (Private) Ltd for raising coal from Utkal D Block in Angul district, with an estimated coal reserve of 138 million.

However, nine years after the formation of the JV not even a single tonne of coal was raised from the block, as the Centre at several points of times objected to the JV agreements.

The Ministry of Coal had pulled up OMC for violating the Coal Act by conceding controlling stake to a private player for developing a coal block allotted to a state PSU. In the Kalinga Coal Mining Ltd, Sainik had 74 per cent stake.

The ministry had issued show cause notice to OMC in July 2010, urging the PSU to raise its stake in the JV 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.

Meanwhile, the centre had rapped the Odisha government-run PSU for taking inconsiderable time to develop the coal block because of non-finalisation of JV agreements through several reminders and warnings.

“The allocatee has been issued show cause notices several times and there has been no improvement in status. Taking into account all factors, and that neither is there any substantial progress nor has substantial investment has been made in development of the coal block, the IMG recommends that the coal block may be de-allocated,” said the letter sent by Coal Ministry to OMC.

While the government of Odisha has taken a decision to scrap the JV agreement with Sainik, the central government has ordered a probe to investigate the JV pattern, which will be conducted by the Central Bureau of Investigation (CBI).