ArcelorMittal set to forfeit guarantee; Kesoram mine

* Coal Ministry accepts IMG recommendations on action against firms

Written by Priyadarshi Siddhanta | New Delhi | Published: September 20, 2012 1:05:19 am

The coal ministry has asked for deducting the bank guarantee of the world’s biggest steel producer ArcelorMittal for failing to develop its coal block in Jharkhand. It has also de-allocated the coal mine held by BK Birla group owned Kesoram Industries.

The decision is part of three de-allocation of coal blocks and deduction of four bank guarantees of promoters that were ordered by the inter-ministerial group (IMG).

This IMG has been set up by the government to track the developments made by the private sector companies in using their coal blocks,after the Comptroller and Auditor General’s report caused a national political storm pegging potential losses from the allocations at Rs 1.86 lakh crore.

The group under the chairmanship of additional secretary Zohra Chatterji,has been meeting since September 2 to examine how many of the 195 coal blocks should revert back to the government or just let off with a deduction in their bank guarantees. With today’s action,the IMG has so far recommended de-allocation of 11 blocks and deduction of bank guarantee in cases of 14 others. A total of 58 mines were given show cause notices for failure to develop blocks within the stipulated timeline. Insiders in Shastri Bhawan say more de-allocations are in the offing and so are deduction in bank guarantees.

LN Mittal-promoted company ArcelorMittal had won the Seregarha coal block in Jharkhand ,jointly with a GVK Power promoted entity in January 2008. The companies were served show-cause notice in May this year asking to explain why the allotted block should not be de-allocated as they have defaulted on almost all the stipulated milestones.

The ministry has also decided to accept the recommendations of the IMG to de-allocate the Gondkhari block in Maharashtra allotted jointly to Kesoram Industries,Maharashtra Seamless Ltd. and Dhariwal Infrastructure in 2008. These firms too were show caused in October 2009 on similar grounds.

Initiating punitive measures against other companies,the ministry has decided to de-allocate the North Dhadu block in Jharkhand allotted to Electrosteel Castings Limited,Jharkhand Ispat,Pawanjay Steel and Power and Adhunik Alloys and Power in January 2006. The Choritand Tailaya mine allotted to Rungta Mines Limited and Sunflag Iron and Steel Ltd in 2008 will also be de-allocated following Wednesday’s meeting.

The IMG has also recommended deduction of bank guarantees of Jayaswal Neco Industries for Moitra block (allocated in 2005) and Nilachal Iron and Power Generation and Bajrang Ispat’s Dumri block (given in January 2006).

Among other firms facing deduction in their guarantees include DB Power for its Durgapur-II/Sariya block allocated to it in November 2007. The IMG would meet again on Thursday to review Electrotherm India and Grasim Industries’ Bhaskarpara block in Chhattisgarh,which was jointly to them in November 2008.

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