Coal block allottees face penalty over production delays

The government on Friday issued fresh show-cause notices to prior beneficiaries of coal block allocations like steel makers JSPL, JSW and Tata Steel, seeking reasons for the delays in mine development; and warned of deduction from their bank guarantees if they failed to furnish replies.

"You are hereby called upon to show cause as to why the delay in the development of the coal blocks should not be held as violation of the terms and conditions of the allocation letter, including in detail the reasons for slippage in respect of each milestone and agency responsible for such delay, within a period of three weeks from the date of issue of this show cause," the coal ministry said in notices issued to the allottees of around 130 coal blocks.

The government also issued fresh notices to companies like Monnet Ispat and Energy Ltd, Bhushan Ltd, Nalco, Hindalco Industries, NTPC, Essar Power, SAIL, Adani Power and Tata Power.

The ministry further said that if they failed to respond, "it would be presumed that your company (ies) has (/have) no explanation to offer and course of action regarding invocation/deduction of Bank Guarantee (BG) would be decided against your company (/ies)."

It said an inter-ministerial group of the union government, at its meeting held last month, observed that subsequent annulment of coal blocks cannot exempt the allottees of the cancelled coal blocks from invocation/deduction of BG.

"Subsequent development or consequence cannot override the condition precedent or bounden stipulations of allocations of coal blocks. As per the conditions of allocation letter, allottees were bound to develop the coal blocks within the time period," the ministry said.

The issue of BG remains alive, it said, adding that the IMG also felt that it was a fact that apart from delays and lapses on the part of the prior allottees, the same might have also been caused due to delay both on the part of agencies of the central as well as the state governments.

"Accordingly, the IMG has recommended to issue show-cause notice (SCN) afresh to coal block allottees as to why the BG submitted with the government should not be deducted for delay in the development of coal block until the block was held by the companies and for not adhering to the milestones chart prescribed for block development," it said.

The recommendations of the IMG have been accepted by the government, it said.