New Delhi: A meeting of the inter-ministerial group (IMG) on Saturday reviewed the allocation of four coal blocks, recommending the deallocation of two blocks and encashing bank guarantees in two cases, according to an official.
The official said the group has recommended that the New Patrapada block in Orissa of Bhushan Steel and Strips Ltd and one block given to SKS Ispat and Power Ltd be deallocated. Mint could not independently verify this.
Bhushan Steel and Strips and SKS Ispat could not be immediately reached for comment.
The IMG also recommended the forfeiture of the bank guarantee of the Bihajan and Radhikapur East blocks, allocated to Bhushan Power and Steel Ltd and Tata Sponge Iron Ltd, respectively, according to officials familiar with the matter.
The IMG will meet again on Monday.
After its meeting on Friday, the IMG was inclined to recommend the cancellation of the Gourangdih ABC coal block of JSW Steel Ltd, a person familiar with the development said.
A senior official in JSW declined to comment on the reasons why the block has not come to production.
“We have given our explanation before IMG. Unless we get a notification or know for sure, we can’t comment,” the official said.
The IMG has held several meetings since last week and its recommendations have led to cancellations of blocks allocated to four companies—Castron Mining Ltd, Field Mining and Ispat Ltd, Domco Smokeless Fuels Pvt. Ltd and Shri Virangana Steels Ltd.
In the case of Shri Virangana, its bank guarantee stands encashed as per the IMG’s last recommendation that was accepted by coal minister Sriprakash Jaiswal. In the case of Monet Ispat and Energy Ltd, based on the IMG’s last recommendation, the company has to submit a bank guarantee that equals three months of royalty and start production of coal by March 2013.
The IMG, comprising representatives of finance, law, steel, power and industries ministries and the Coal Controller, and headed by Zohra Chatterji, additional secretary in the ministry of coal, has accelerated its review of companies that have received show cause notices after a report of the Comptroller and Auditor General of India (CAG).
The CAG report presented to the parliament on August 17 said coal block allocations led to a notional loss of Rs.1.86 trillion and also alleged the blocks were given out in an untransparent manner.
Between 1993 and 2011, 195 blocks were allocated to 289 companies in the private and government sectors, but only 30 of the blocks came into production owing to regulatory hassles or because of the companies own lack of expertise or funding.
The IMG has been examining 58 of the blocks that got show cause notices earlier in the year by coal ministry. As many as 20 of these companies also feature in CAG’s report.
Ruchira Singh contributed to this story.