Government to decide the fate of 10 more coal blocks on February 25
Coal blocks allocated to power and steel companies over the past two
decades are now being taken back from these firms after the Comptroller
Auditor General (CAG) of India pointed out large-scale irregularities
in allocation and development of these coal blocks
.
Earlier this month, the Inter-Ministerial Group (IMG) recommended
cancellation of 28 coal blocks. More than 100 mining, power and steel
companies were to source their raw material from these coal blocks.
Following IMG’s recommendation, the Union Ministry of Coal on
February 17 issued letters of cancellation for 18 coal blocks. Companies
that have been allocated these coal blocks have either failed to secure
requisite environment and forest clearances for developing them or
failed to start coal production, state the letters. These coal blocks
were allocated to steel and power biggies, including ArcelorMittal,
Hindalco, Tata Power, Reliance Energy, GMR, Lanco, Jindal Steel and
Power Limited (JSPL) and Vedanta-owned Sterlite.
The ministry, however, put on the hold the cancellation
recommendation for 10 coal blocks after companies that were allocated
these captive coal blocks approached the court against IMG’s decision.
These companies include Essar Power, Tata Steel, JSW Steel and DB Power.
IMG will now meet on February 25 to decide the fate of these 10 coal blocks.
Legal action against ministry
The industry associations have strongly criticised the move, saying
companies have made large-scale investments in developing these blocks.
Some companies whose coal blocks have been de-allocated plan to approach
the judiciary.
JSPL issued a statement earlier this week that it will challenge the
decision to scrap Ramchandi coal block, which was to supply coal for its
coal-to-liquid project in Talcher region of Odisha. JSPL claims it has
invested Rs 77,450 crore on the project, which will provide employment
to over 30,000 people. However, according to the show cause notices
issued by the Ministry of Coal on June 17, 2013, the company did not
submit an application for mining lease nor did it formulate a mining
plan. Its forest and environmental clearances are still pending.
Similarly, IMG also de-allocated Arkhapal-Srirampur (north) block in
Talcher, held by Strategic Energy Technology Systems (SETSPL), a joint
venture between a consortium of Tata Group companies and South African
energy major, Sasol, which wanted to develop a coal-to-liquid project.
Monnet Ispat which was allocated Rajgamar Dipside block in Sundargarh
district of Odisha along with Topworth Steel, another private steel
manufacturer, has also issued a statement, saying they will take
recourse to legal action against the cancellation. “We will go to the
court of law,” Sandeep Jajodia, chairperson and managing director of
Monnet Ispat, said in a statement issued on Wednesday. Jajodia claimed
that South Eastern Coalfield Limited, a PSU, was mining in the lease
area and the Ministry of Coal was supposed to clear out the surface
area. Till the surface area of the coal block was ready to be mined,
Monnet and Topworth were given “grace period”. Both the companies made
an investment of Rs 6,729 crore.
In the case of the Rampia and Dipside coal blocks in Sundargarh, the
blocks were jointly allocated to Lanco, Sterlite Power, GMR Energy,
Navbharat Power, ArcelorMittal and Reliance Energy. IMG recommended
cancellation of the blocks, but the decision was put on hold after an
interim stay granted by the Delhi High Court. While Arcelor Mittal had
surrendered its share of the coal block, Ministry of Power during the
meeting stated that Sterlite, GMR and Lanco had invested Rs 8,287 crore,
Rs 5,600 crore and Rs 4,800 crore, respectively, in their end-use
plants.
Irregularity in allocation
The decision to de-allocate the coal blocks comes following the
Attorney General G E Vahanvati’s statement in the Supreme Court earlier
this year that the Union government would be reviewing allocation to 61
coal blocks. On January 15, the Ministry of Coal served a three-week
ultimatum to the companies sitting on the 61 blocks, where mining leases
were not executed to furnish proof of the requisite clearances obtained
by them to operationalise their captive mines. Ministry officials say
most companies could not furnish documents related to clearances in this
“short span of time”.
Earlier, Comptroller Auditor General’s (CAG) report stated that by
not adopting an auction route for 208 coals blocks across central India,
the government exchequer faced losses up to Rs 1.86 lakh crore.
Following the CAG report, the Central Bureau of Investigation is
investigating the matter.
The companies whose coal blocks are under review include, Tata Steel
Ltd, Tata Sponge Iron Ltd, Tata Power Co. Ltd, Jayaswal Neco Ltd, JSPL,
Reliance Energy Ltd, Ultratech Ltd, Rungta Mines Ltd, Essar Power Ltd,
Hindustan Zinc Ltd, Hindalco Industries Ltd, DB Power Ltd, Adani Power
Ltd, Arcelor Mittal Ltd, GVK Power Ltd, Bhushan Power and Steel Ltd,
Monnet Ispat and Energy, Sterlite Energy Ltd, GMR Energy Ltd, Usha
Martin Ltd, JSW Steel Ltd, Jaiprakash Associates Ltd, ACC Cement Ltd,
Uttam Galva Steels Ltd, Adhunik Corp. Ltd and SKS Ispat and Power Ltd.
