Coal news and updates

Coal order: Blocks axed on development delays

De-allocation began in 2006, picked up pace in 2012 after CAG found policy for allocations through screening committee route was faulty


Delay in developing coal blocks has led to the government cancelling 77 of the 177 blocks allocated to companies since 2004. The government’s move to cancel was based on the recommendations of a review committee and, subsequently, an inter-ministerial group (IMG).

The de-allocation drive began in 2006 and picked up pace in 2012, after the Comptroller and Auditor General’s observation that the policy to allocate coal blocks through the screening committee route was faulty and might have led to a notional loss of Rs 1.8 lakh crore to the exchequer.

The companies whose blocks were deallocated included Vedanta’s Hindustan Zinc and Sterlite Energy, Jindal Steel & Power Ltd (JSPL), Arcelor Mittal, Lanco, GMR, Tata Sponge Iron, Rungta Mines, Essar Power, Adani Power, Monnet Ispat, Aditya Birla Group’s Hindalco, Ultratech and Bhushan Steel.

For the cancellations, the coal ministry cited “no substantial progress in development”, “environment and forest clearance not obtained” and “prospecting licence not taken”.

A case in point is JSPL's Amarkonda Murgadangal block was cancelled in December last year. "All milestones were pending including drilling for detailed exploration could not commence even after a lapse of more than 5 years from the date of allocation," the ministry said.

In the case of Adani Power, the ministry de-allocated Lohara West Extn block arguing anvironmental and forest were not obtained on cut-off date. The project was within the proposed buffer zone of Tadoba-Andheri Tiger Reserve in Maharashtra.

Power generator NTPC Ltd was among the large companies impacted by cancellations. Five of the company's blocks, with over 3 billion tonne reserves, were cancelled in 2012 after a review exercise found major delays in development. However, the blocks were allocated to NTPC again.

Many of the companies impacted by whole-sale cancellations had approached the courts appealing against the government decision. The coal ministry had however proceeded to formulate a policy for allocations based on competitive bidding and has so far allocated 17 blocks to government companies under the new regime.

Source: Business Standard