IMG review shows coal sector in a bad light

September 15, 2012 08:26 pm | Updated December 04, 2021 11:13 pm IST - NEW DELHI:

The September 12 review by the Inter-Ministerial Group (IMG) of mining companies has given a deeper insight into the decay in the coal sector — marked by fraudulent investments, forgery of documents and misrepresentation of financial and material facts by various private firms.

In another shocker, not only the original allottees of coal blocks sold their companies and disappeared but some of themdid not turn up before the IMG, after having been served show-cause notices.

According to the minutes of the meeting, accessed by The Hindu, the Bramhadih coal block in Jharkhand, given to Castron Mining Ltd during the NDA regime, was was an abandoned, underground mine of Coal India Limited (CIL) for which all necessary clearances were available. However, but for a brief period, mining was not carried out even after 13 years of allocation on September 1, 1999.

The allottee “has not taken any step to set up end use plant (EUP) and at the time of presentation even took the plea that since the allocation does not specifically mention an EUP, it [Castron Mining] has not set up the plant and could take it on lease from its sister concern if required.” This assertion is “patently not maintainable because [under] the provision of the Coal Mine (Nationalisation) Act 1973, the coal block was allotted for captive mining and no private company is permitted to undertake mining except for specified end-users.” Also the mining opening permission granted by the Coal Controller in 2005 was subject to the condition of the allottee setting up a washery and EUP, the IMG ruled.

Though the company maintained that it had spent Rs. 17 crore on overburden removal and manpower, Castron Mining has failed to furnish a certificate from the Chartered Accountant in support of its investment claim. Therefore, the IMG recommended de-allocation of the coal block.

The IMG also de-allocated the Chinora and Warora southern part blocks, which Field Mining and Ispat received on October 8, 2003, again when the NDA was in power. The mine was allocated to promoter Anil Taneja and Kavita Taneja, who sold the company to the Wardha group (KSK group) of Hyderabad. Despite a notice issued to it on September 4, 2012, the company did not turn up to make any presentation or submit a CA certificate on investment.

However, the company got a letter delivered through a messenger on September 6. “The IMG has noted the company has neither made any progress towards the end use plant nor made serious efforts for the development of coal block.” Also, there are court cases which do not prohibit action against the company. There is no provision for bank guarantee in the allocation letter. In the case of DOMCO Smokeless Fuels (P) Ltd., which got the Lalgarh North coal block in Jharkhand, the IMG said there had been no progress in mining since the allocation on July 8, 2005. Even the mining plan was not approved so far, as initially the company presented two different mining plans by two different persons, both claiming to be managing directors. The company also failed to submit clarifications sought by the Coal Ministry. “Due to a dispute within the company there has been an inordinate delay in development of the block and there is no progress in development of EUP. The CA certificate has not been submitted for investment made by the allottee. Hence the IMG has recommended that the coal block be de-allocated with full forfeiture of the bank guarantee.

Shree Virangana Steels Limited, however, did not meet the fate of the other companies but had its bank guarantee deducted. Production in the blocks, allocated to the company on September 6, 2005, started on December 15, 2011. The EUP was operational as per the status report. The IMG, while taking into account delays on the part of the allottee, recommended that the blocks “may not be de-allocated” in view of substantial progress. “However, bank guarantee should be deducted as per formula designed by IMG.”

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