Coal news and updates

IMG allows deduction of BG, but with riders

October 13: The Inter-Ministerial Group, at its 27th meeting held recently, observed that in a number of cases where delay/slippage of milestones was attributable to various factors beyond the control of the allocatees – such as go-no-go areas, wild life sanctuaries, tiger reserves etc, it was not appropriate to penalise the allocatees and deduct/forfeit the BG submitted by them, according to an official release from the Ministry of Coal.

It was decided that deduction of BG linked to the development of a block should be imposed on all allocatees whose blocks had been de-allocated as decided at the third IMG meeting. However, while calculating the slippage/delay caused due to factors indicated above should be considered.

It was decided that the Coal Controller’s Organisation would prepare a detailed report in respect of all the 61 blocks considered at the 24th meeting as well as the period which should be discounted in respect of the above factors.

The meeting was undertaken to review the issue of bank guarantees (BG) of the 61 coal blocks allocated to private companies.

At the 24th meeting, it had been decided to de-allocate 31 blocks which had been accepted by the government and accordingly necessary orders for de-allocation had been issued.

At the 26th meeting, 10 blocks were reviewed wherein 2 met with the prescribed criteria of obtaining EC/FC while the remaining eight were asked to obtain Forest Stage II clearance by November 30, 2014, failing which their blocks would be de-allocated.

It had been mentioned at the 24th meeting that the decision of the IMG with regard to imposition/deduction of BG would be taken up separately.

It may be mentioned that many of the coal blocks which had been recommended for de-allocation at the 24th meeting had approached various high courts and received interim orders directing the government to maintain status quo/not take any coercive action/not create any third party interest.

It was discussed that some block allocatees, whose blocks had been de-allocated and the same had been challenged before the court of law  were not renewing their BG amount which was a matter of concern. The IMG was aware that when the courts gave the interim orders, the BG was in force. Allowing the BG to lapse by not renewing it was tantamount to changing the status at the time of the order, the meet observed.

Hence the IMG was unanimous that where the block allocatees had filed court cases, challenging de-allocation and got a favourable order, the pre-de-allocation status had to continue.