IAS Daily Dose: Current Affairs 2013 for UPSC IAS Exam - IMG to decide on coal block deallocation

Last Updated: May 22, 2013 at 11:32:16

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Current Affairs Notes for PT 2013

The Prime Minister's Office (PMO) has directed the Coal Ministry to fast-track the process of taking back the coal blocks from private firms which have not developed them and giving the de-allocated coal mines to Coal India (CIL).

A coal reserve of some 50-billion tons was allocated to various private companies between 1999 and 2009, with output from these blocks forecast at 104-million tons a year by 2012 and 250-million tons a year by 2017. However, production of only 30-million tons a year has been achieved by the private companies from these captive mines.

Thus 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 Coal Ministry had recently allotted 116 mines to CIL for expansion to help it boost production capacity amid the PSU drawing flak for coal shortage across the country. Though the CIL had asked for 138 mines, the Coal Ministry asked the coal major to recast its plans. Since CIL is a government-owned company, the Coal Ministry under the government dispensation route has the right to allocate mines to the CIL.

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 notices were issued to firms such as Reliance Power's Sasan, Tata Power, Hindalco, Grasim Industries, JSW, Bhushan Steel, TVNL, Jharkhand State Mineral Development Corporation and Chhattisgarh Mineral Development Corporation, among others. The notices sought reasons for delay in developing blocks and warned them of cancellation of mines if no explanation was given in 20 days.

The IMG to be headed by the additional secretary in the coal ministry Zohra Chatterji and comprising representatives from 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.

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 in 2005 to 2008, during which 15 and 16 coal blocks were allotted.