Coal blocks: Explain irregularities: Ministry to allottees

PRIYADARSHI SIDDHANTA
Tuesday, Jul 03, 2012
Financial Express
New Delhi: The coal ministry has asked for an explanation from Nagpur-based Veerangana Steels Ltd, which changed its name to Topworth Urja and Metals Ltd after being allotted three coal blocks in Maharashtra’s Yavatmal district in 2005 — and thereafter merged with Chhattisgarh-based Crest Steel and Power Ltd.

“It appears that the entire management of the original allocatee company has been handed over to others who were not the original allocatees of the said blocks. The allotment of coal blocks by the government is for captive purpose and is not for profiteering. The sale of shareholding for profit defeats the purpose of such allocation,” the ministry has said in a fresh show-cause notice issued to the firm.

Another irregularity detected in an ongoing internal probe by the ministry has indicted Nagpur-based Sunflag Iron and Steel Company for allegedly diverting coal meant for use exclusively at the company’s 15 MW captive power plant in Bhandara.

“According to standard norms, requirement of 15 MW captive power plant is only 0.75 lakh tonne. The Coal Controllers’ Organisation (CCO) has estimated that between December 2008 and November 2009, the company produced 1.2 lakh tonnes, which was more than the requirement. It has been decided to constitute an inter-ministerial committee to carry out spot verification of the block as well as end-use plants,” a top ministry official told The Indian Express.

He said more such cases were being found and eventually action, including possible cancellation of allotments, could be expected. The ministry has already found at least 58 block-holders are yet to start production and is treating them as non-serious squatters. More than 50 firms have also been issued show-cause notices.

All these blocks were given based on a points-based screening system, where applications were scrutinised by a non-transparent inter-ministerial screening committee that included representatives of the state governments concerned. “We have served show cause notices... if they still do not perform, then the only recourse left is de-allocation,” the official said.