IMG to decide on coal block deallocation

PRIYADARSHI SIDDHANTA, Financial Express
Posted: Thursday, Jun 28, 2012
New Delhi: The coal ministry has decided to form an Inter-Ministerial Group (IMG), with ministries such as power and steel on board, to formally decide on de-allocating the non-performing blocks or forfeiting the Bank Guarantees (BGs) of the companies which have done nothing to develop the block after allocation.

The ministry’s move comes close on the heels of enhanced public scrutiny on the allocation process and the subsequent move by the Central Vigilance Commission (CVC) asking the CBI to probe any alleged discrepancies in allotment of coal blocks between 2005 to 2008 during which 15 and 16 coal blocks were allotted.

Already 32 companies have been warned that they may lose their BGs if the progress on developing blocks continues to remain unsatisfactory. Similarly, 58 firms have been told that they risk de-allocation as the ministry has found their progress below expectation.

The IMG to be headed by the additional secretary in the coal ministry Zohra Chatterji and comprising representatives form power, steel, departments of economic affairs, industrial policy and promotion, and law and justice has been mandated to undertake periodic review of the progress made in the allotted coal and lignite blocks and recommend actions to be taken including their de-allocation.

Justifying the need for setting up the committee, coal minister Sriprakash Jaiswal said the decisions to impose any penalty or de-allocation should be broadbased after intense deliberations and due scrutiny.

“It should not be construed later on that the coal ministry is the sole arbiter of the de-allocation process and inclusion of these representatives should be adequate to decide upon any action in a transparent manner with reasonable conviction,” Jaiswal told The Indian Express.

Jaiswal said the IMG has been entrusted to assess the replies furnished by various companies in reply to the show-cause notices issued by the ministry and make an independent assessment on the action to be taken.

Out of a total of 218 coal blocks allocated so far, 23 have been de-allocated as of December, 2011. Out of the 195 blocks that stand allocated, 39 have been given to PSUs and around 29 have commenced production.

In the wake of growing scepticism on the allocation process, the coal ministry wants to tread cautiously on both allocation and de-allocation process.