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Two more captive coal blocks deallocated; toll at 25 (Feb.)


Financial Express, Delhi, Thursday 20th February 2014

The coal ministry on Wednesday cancelled the allotment of two captive coal blocks held by a consortium of companies, including Ispat Godavari, taking the total number of private blocks that have been deallocated (based on a review undertaken by the inter-ministerial group on 7-8 February) to 25.

The IMG has recommended deallocation of 31 of the 61 captive blocks allocated to private companies for their fuel requirements. The ministry deallocated 13 and ten blocks on Tuesday and Monday, respectively, due to delays in production. The blocks deallocated by the ministry on Wednesday are Nakia I & II.

Meanwhile, sources said the IMG will again meet on Tuesday to decide the fate of ten captive coal blocks held by private companies like Tata Steel and Jindal Steel and Power, which were asked by the coal ministry to either secure second-stage forest clearance by February 12 or risk losing the blocks.

The IMG was set up in 2012 after the Comptroller and Auditor General in an audit report lambasted the Centre for extending undue gains of R1.85 lakh crore to private players by allocating coal blocks without following the auction route.

The majority of these companies have invested huge amounts in their end-use projects on hope of coal availability from the allocated captive blocks. But with coal mining projects stuck in environment and land acquisition hurdles, these companies are now worried that their investments might go dud.

For example, Sterlite, GMR and Lanco, whose jointly allocated Rampia and Dipside Rampia block was deallocated on Tuesday, have together invested more than R18,000 crore in their associated power projects. Sterlite has spent R8,287 crore, Lanco R5,600 crore and GMR R4,800 crore in their respective projects, which were envisaged to be fired with coal production from the allocated block. The total investment made by private coal block allocatess is estimated at 2.85 lakh crore.

Fatehpur, Bijahan and Rajgamar Dipside, Madanpur North are the key blocks where the ministry on Tuesday accepted the IMG's recommendation for cancellation of allotment. These blocks belonged to companies like Jindal Steel and Power, Tata Sponge Iron, SKS Ispat and Power, Prakash Industries, Bhushan and Monnet Ispat.