New Delhi:  Under attack over coal block allotments, government on Thursday decided to de-allocate four blocks and encash bank guarantees of three others belonging to private companies for failing to meet timelines on production and development of mines.

The government decision came shortly after an Inter- Ministerial Group (IMG) made such a recommendation after evaluating the performance of each of the cases in respect of factors like approval of mining plan, grant of environment clearance, status of forest clearance and land acquisition.

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The IMG, in its meeting held on Wednesday, had deliberated upon the cases of five companies which were allocated eight coal blocks, a statement issued by the Coal Ministry said.

The statement noted that the IMG had recommended de-allocation of four blocks -- Bramhadih Block in Jharkhand allocated to Castron Mining Ltd in 1996, Chinora and Warora (southern part) blocks in Maharashtra given to Fieldmining and Ispat Ltd in 2003, Lalgarh (North) block in Jharkhand allotted to DOMCO Smokeless Fuels Pvt Ltd in 2005.

The IMG also recommended deduction of Bank Guarantee (BG) in case of Marki Mangli-II, III and IV Blocks in Maharashtra allocated to Shri Virangana Steels Ltd, the statement said.

The Group also recommended that in the case of Utkal B2 Block in Odisha allocated to Monnet Ispat &

Energy Ltd in 1999 "where there was substantial progress but no provision for BG, the allocattee may be asked to submit BG amounting to three years royalty within a period of one month from date of letter in this regard failing which the block may be deallocated", it said.

Sources said the BG in case of Shri Virangana Steel, now Topworth Urja and Metals Ltd, is Rs 2 crore, while that for Monnet Ispat is Rs 90 crore.

"Recommendations (of IMG) have been accepted by the government," the Ministry statement said.

The eight blocks are among 58, which are under scrutiny of the IMG. It has so far taken up the cases of 29 allocated to private companies.

While these eight blocks were reviewed on Wednesday, 10 more cases will be taken up tomorrow.
Sources said IMG has recommended de-allocation of blocks, mainly because the allocatees failed to set up end-use plants.

"The IMG would continue examination of remaining cases in its next meeting scheduled to be held on September 14, 2012 and will hold further meetings as may be required for completing recommendations," the statement said.

Commenting on the development, Coal Minister Sriprakash Jaiswal said, "File (pertaining to coal blocks) came to me at 12 pm on Thursday...I immediately cleared it".

Answering a question which saw a design in the de-allocation decision because some of the blocks were allocated during the NDA rule, he said, "Please ask me the question after seeing the results of all these blocks".

Jaiswal said his ministry was empowered to take decision on the recommendations of the IMG and there was no need to seek Cabinet's permission for it.

Asked whether there was a possibility of the ministry accepting all the recommendations for cancellation, if any, he said that it was possible.

The private firms, whose coal blocks have been cancelled, could not be reached for comments.
Spokesperson of Monnet Ispat and Energy, which has been asked to deposit bank guarantee, said, the company has "not received any official communication."

"We have made our representations to the IMG... All we would like to emphasise upon is we are a serious player and we have already gone ahead with lot of development on the block," the spokesperson added.

Sources said IMG has recommended that in case Monnet Ispat fails to start production by March 2013, its bank guarantee of Rs 90 crore would be forfeited and the block would be de-allocated.

Monnet Ispat was allocated Utkal B2 coal block in Odisha in 1999, which has an estimated reserves of 77 million tones (MT).

The official statement said IMG has been reviewing the developments of blocks on individual basis and also obtained a status paper from Coal Controller/Ministry of Coal.

This is the first recommendation by the IMG ever since the controversy over the allocation of coal blocks broke out with the CAG estimating undue benefits of Rs 1.86 lakh crore to private firms due to allocation of 57 mines sans auction.

IMG, headed by Additional Coal Secretary Zohra Chatterji, formed earlier this year, had sent out show-cause notices to 58 block allottees, including 20 mentioned in the CAG report, for furnishing the cause of delay in developing the mines.

The panel heard representations by 29 block allottees, all of whom are from the private sector, on September 6-8. The allottees had said delays in starting the production resulted due to lack of various clearances from different state governments.

Tata Steel, Reliance Power, JSW, Grasim Industries, Kesoram Industries, IST Steel & Power, SKS Ispat and Power, Bihar Sponge Iron, among others, had appeared before the IMG.

The remaining 29 coal blocks, which were given show-cause notices, are with public sector companies, including MMTC, Chhattisgarh Mineral Development Corporation and Jharkhand State Mineral Development Corporation.


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