De-allocation of 11 coal blocks to bury Rs 24K cr investment...

 

The government’s decision to cancel allocation of 11 captive coal blocks to 18 companies may turn Rs 24,000 crore invested into developing these mines into sunk capital.

Further, financial penalties have been levied on another 12 firms in the form of forfeiture or deduction in their bank guarantees, which would imply revenue outgo of hundreds of crores of rupees for them. An inter-ministerial group (IMG) of the coal ministry, constituted to recommend punitive measures against companies idling on their allocated blocks, in its meeting on October 24-25, heard 30 firms on why they failed to develop their mines.

After scrutinising the presentations made by the firms, the panel on November 25 recommended de-allocation of 11 mines and forfeiting fully or partially their bank guarantees. These firms include Naveen Jindal-promoted JSPL, SAIL, Rungta Mines, Birla Corporation and Monnet Ispat and Energy. Monnet Ispat and Energy seems to be taking the biggest hit, followed by JSPL, Birla Corporation and Sunflag Iron and Steel and Dalmia Cement JV.

The minutes of the meeting, in possession with The Indian Express, reveals that contrary to the popular perception, the companies claimed to have invested a total of around Rs 24,401 in developing their respective blocks. To bolster their contention, these 18 companies have furnished certified investment documents to the IMG. The identical problems which came in the way of developing these mines were difficult land acquisition issues and tardy progress in securing green clearances. Companies like JSPL have even complained that besides difficult and remote terrain they also faced problems from naxalites.

The state governments have not been of much help, NTPC told the IMG. It said a key reason why the Pakri Barwadih mine remained undeveloped as the land acquisition issue is pending with the Jharkhand government. The PSU is plagued with similar problem for its Talaipalli mine as the land acquisition issue is pending with the Chhattisgarh government. SAIL, too, is awaiting the mining lease for the Sitanala block.

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SAIL seeks change in thermal coal mine allocation rule to PSUs...

 

Anticipating its captive power needs to nearly double in 2-3 years, SAIL wants existing rules for thermal coal block allocation to be amended so as to make government firms without power purchase agreements eligible.

The country's largest steel maker now requires around 1,000 MW power to fire its five integrated steel plants. This will go up to 1,850 MW in the next 2-3 years with the ongoing Rs 70,000 crore modernisation and expansion programme.

Already saddled with 75 percent imports of its coking coal needs, SAIL has flagged the issue to Steel Ministry for soliciting Coal Ministry for allotment of thermal coal mine to the state-run steel maker.

"Intervention of Ministry of Steel is requested for amending in Rule 12 of part-II of Gazette Notification dated December 27, 2012 of Ministry of Coal on auction of coal by competitive bidding," SAIL said.

As per the existing policy, there is no provision for thermal coal allocation for government companies for their captive power plants.

The current policy only allows thermal coal blocks to be allocated for government companies having power purchase agreements with the state utilities prior to January 5, 2011.

"With the increase in the hot metal capacity with the investment of more than Rs 70,000 crore, the power requirement of SAIL is expected to increase to 1,850 MW from the present level of about 1,000 MW in the next two-three years," the PSU said.

SAIL currently has around 14 million tonnes per annum hot metal producing capacity. This will go up to 24 mtpa by the end of next calendar year with the completion of the ongoing expansion.

"The help of the Ministry of Steel is required for taking up the matter with Ministry of Coal for allotment of thermal coal blocks in favour of SAIL being the leading steel maker in the country," SAIL said.

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