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Web Exclusive | December 2012

IMG recommends de-allocation of Utkal coal block

The inter-ministerial group (IMG) at the centre recommended de-allocation of the Utkal-D coal block given to Odisha Mining Corporation (OMC) on grounds that the allocatee was issued show cause notices several times and there was no improvement in status.

In a formal letter to OMC on November 30, the coal ministry said taking into account all factors, and that neither is there any substantial progress nor has substantial investment has been made in development of the coal block, the IMG recommends that the coal block may be de-allocated.

Utkal-D coal block in Odisha was allotted to OMC in December 2003, after which the state-run miner had joined hands with Delhi-based Sainik Mining & Allied Services (SMASL) for coal mining in the state. Both the companies had formed a JV named Kalinga Coal Mining for raising coal from Utkal D Block in Angul district, with an estimated coal reserve of 138 million.

However, nine years after the formation of the JV not even a single tonne of coal was raised from the block, as the centre at several points of times objected to the JV agreements. The coal ministry had pulled up OMC for violating the Coal Act by conceding controlling stake to a private player for developing a coal block allotted to a state PSU. In the Kalinga Coal Mining, Sainik had 74 per cent stake.

The ministry had issued show cause notice to OMC in July 2010, urging the PSU to raise its stake in the JV to at least 51 per cent. In addition to this, the ministry had also advised OMC to suitably modify the Memorandum and Articles of Association of the JV company.

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