CoalMin’s wake up call: Idle blocks face de-allocation

Mounting pressure on companies for ensuring utilisation of allocated coal blocks, the coal ministry has issued...

Mounting pressure on companies for ensuring utilisation of allocated coal blocks, the coal ministry has issued an ultimatum that at least 15 blocks ensure extraction activity within 21 days. Failure to do so would mean the companies would not only have to forfeit their bank guarantees, but also face imminent de-allocation.

Following a recent review of production from allocated blocks, the ministry found certain allocates idling and decided to issue a wake-up call. The ministry made it clear that they risked de-allocation in the eventuality of the blocks remaining idle, a senior ministry official said, pointing out that instances had surfaced where blocks allocated earlier had been lying idle, prompting the ministry to issue a stern warning to allocatees.

A total of 172 coal blocks with reserves of 38 billion tonne have so far been allotted to various private and public sector companies, he pointed out. Thirty-one private companies had been allocated 15 coal blocks with reserves of 3.6 billion tonne to support additional generation of 16,000 MW. So far, the ministry had identified 81 coal blocks with about 20 billion tonne reserve for allocation to companies. Of these, 41 coal blocks with reserves of about 15.7 billion tonne were earmarked for the power sector.

Story continues below this ad

Some blocks allocated earlier were de-allocated from state-run Coal India Ltd to ensure raw material security to companies unlikely to go for production during the current plan period. The ministry also allocated 10 blocks to public sector companies exclusively for captive mining for power generation. Another 15 blocks were allotted to private companies for captive use for power generation, the official said.

Of 16 blocks earmarked for ultra mega power projects, three each were allotted to Orissa and Madhya Pradesh UMPP and one to Jharkhand. Rajasthan Rajya Vidyut Utpadan Nigam Ltd was allotted two blocks, the official said.

However, he made it clear that any laxity on part of the allocatees would not be brooked and the government would resort to the extreme step of forfeiting their bank guarantees and de-allocating the blocks for delaying production. According to information available, of the 163 blocks allocated till date, just over a dozen have reached the desired production levels. The rest — some of which were allotted as far back as 1998 — have either not secured environmental clearances or have not submitted acceptable mining plans to the government.

According to the coal ministry’s guidelines, 50 per cent of the bank guarantee shall be linked to the milestones (time schedule) set for development of captive block, and the remaining 50 per cent to the guaranteed production.