Notices to 10 firms including Reliance Power's Sasan, Tata Power, Hindalco for delay in coal block development

1 MAY, 2012, PTI
NEW DELHI: Government issued show-cause notices to 10 firms, including Reliance Power's Sasan, Tata Power, Hindalco and Grasim Industries asking reasons for delay in developing coal blocks and warned that the same may be cancelled if explanation is not given in 20 days.

"You are called upon to show cause...as to why the delay in the development of the coal block(s) should not be held as violation of the terms and conditions of the allotment ... failing which...action as appropriate would be taken against your company(ies) for de-allocation...," the Coal Ministry said in similar notices to these companies.

These firms were allocated blocks between 1999 and 2008 for development of captive mines for power generation. The projects for which the coal blocks were given, included 4,000 MW Sasan ultra mega plant in Madhya Pradesh.

The show cause notices have also been sent to public sector Jharkhand State Mineral Development Corporation and Chhattisgarh Mineral Development Corporation. Besides MP, the blocks are located in Jharkhand and Chhattisgarh.

Notices would be sent to about 58 coal block holders, sources said. Of 218 blocks allocated 25 have been taken back by the government.

While the coal-mining for commercial sale is a monopoly of the PSU Coal India, firms in power, steel and cement were given the coal blocks for captive use on the first-come-first-serve (FCFS) basis.

But most of them could not develop the blocks for various reasons ranging from problems in environment clearances and difficulties in land acquisition.

Meanwhile, the FCFS policy has come in for a severe criticism by the Comptroller and Auditor General (CAG), which has reportedly estimated 'windfall gains' to private and public sector companies at Rs 10.67 lakh crore.