Acting further on the recommendations of the Inter-Ministerial Group (IMG) set up to review the allocation of coal blocks, the Coal Ministry on Tuesday de-allocated two more blocks, including one linked to Sudhir Kant Sahai, brother of Union Tourism Minister Subodh Kant Sahai, and recommended stiff penal action against Congress MP Naveen Jindal-owned Jitpur coal block in Chhattisgarh.

The Ministry also decided to deduct bank guarantees of Tata Sponge Iron and Bhushan Power and Steel Ltd for having failed to develop the blocks allocated to them in Odisha within the time frame, an official statement said.

Ending the suspense, the Ministry moved against SKS Ispat and Power Ltd, in which Mr. Sudhir Kumar Sahai is honorary director, de-allocating its Fatehpur block. The IMG had on September 15 recommended cancellation of this block. Senior Congress leader Subodh Kant Sahai had reportedly written to Prime Minister Manmohan Singh in 2008 recommending allocation of two blocks to SKS Ispat and Power in Chhattisgarh and Jharkhand.

The other block de-allocated was New Patrapara in Odisha, given to Bhushan Steel and Strips Ltd in January 2007. The government accepted the IMG recommendation to deduct bank guarantees of the Radhikapur East coal block allotted to Tata Sponge Iron and others and the Bijahan coal block allotted to Bhushan Power and Steel Ltd.

The IMG, at its meeting on Tuesday, recommended deduction of the bank guarantee of two blocks including one given to Jindal Steel & Power Ltd (JSPL) in which Mr. Jindal is chairman-cum-managing director. However, the amount of the forfeited bank guarantee was not disclosed.

It is learnt to have recommended de-allocation of the Macherkunda block given to Bihar Sponge and deducting bank guarantee of two others — the Jitpur block given to Jindal Steel and Power and the Chitarpur block, allotted to Corporate Ispat. These three blocks find mention in the CAG report, which has estimated that undue benefits to the tune of Rs. 1.86 lakh crore might have accrued to private firms in the allocation of 57 mines without auction.

The Jitpur mine in Jharkhand was allotted to JSPL in February 2007 and has extractable reserves of 65.53 million tonnes. The coal from it was meant to be used for an end-use power plant with a capacity of 2 x 600 MW, to be built about 20 km away from the pithead of the mine.

The Macherkunda block in Jharkhand was given to Bihar Sponge in August 2008 and has extractable reserves of 8.82 million tonnes. The Chitarpur block in Jharkhand, which was given to Corporate Ispat and Alloys in September 2005, has 58.6 million tonnes of extractable reserves.

With the de-allocation of two more blocks, the total number of mines that have faced this action has increased to seven. The bank guarantee of seven firms has been deducted. The IMG has so far recommended de-allocation of eight blocks and deduction of bank guarantee in the case of 10 blocks. The Group, which is scrutinising 29 out of 58 cases for which notices had been issued, will meet again on Wednesday.

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