Govt to cancel four coal block allotments, encash three bank guarantees

UNDER mounting pressure to act against the alleged irregularities in the allotment of coal blocks, the government announced Thursday that it has decided to cancel the allotment of four blocks and encash the bank guarantees offered for three other blocks as the private firms which got them had failed to develop the mines on schedule.

A Coal Ministry statement said that the Inter-Ministerial Group (IMG) looking into the issue had recommended cancellation of four blocks: Bramhadih Block in Jharkhand allotted to Castron Mining Ltd in 1996; Chinora and Warora (Southern part) blocks in Maharashtra given to Fieldmining and Ispat Ltd in 2003; Lalgarh (North) block in Jharkhand allotted to DOMCO Smokeless Fuels Pvt Ltd in 2005.

The IMG also recommended encashing the bank guarantees of Marki Mangli-II, III and IV Blocks in Maharashtra allotted to Shri Virangana Steels Ltd. "Recommendations have been accepted by the government," the statement said.

The Centre's decision came in the wake of the IMG recommendation, made after evaluating the progress in each of these cases with respect to milestones, including approval of mining plan, grant of environment clearance, status of forest clearance and land acquisition. The IMG, in its meeting held on Wednesday, had examined the cases of five companies that were allotted eight coal blocks.

The group also recommended that in the case of 'Utkal B2 Block' in Odisha allotted to Monnet Ispat & Energy Ltd in 1999, "where there was substantial progress but no provision for bank guarantee, the allottee may be asked to submit bank guarantee amounting to three years royalty within a period of one month from date of letter in this regard, failing which the block may be deallocated".

Sources said the bank guarantee in case of Shri Virangana Steels, now Topworth Urja and Metals Ltd, is Rs 2 crore, while that for Monnet Ispat is Rs 90 crore.

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