The coal ministry has pulled up CESC for the delay in developing coal mining block at Mahuagarhi in Jharkhand. It has threatened to cancel the lease of the coal block to the power firm.
The RPG group flagship, however, feels the delay was owing to factors beyond its control. It is likely to seek the central government’s mediation. The company reasons that it still has almost three years to develop the block.
Meanwhile, CESC-JAS Infrastructure Capital Pvt Ltd, the 50:50 JV formed that has been allotted the coal black, is said to be losing out heavily owing to the delay.
CESC was allotted 8 sq km at Dumka’s Mahuagarhi coal block in January 2008. This unexplored block is said to have a potential of 138 mt of coal and is supposed to feed the power utility’s 1000 mw greenfield plant in Jharkhand.
The ministry of coal on September 24, 2009 shot off a show cause letter to the CESC top management stating that there was no progress. “In spite of a passage of more than 18 months, no serious effort has been made by your company to obtain the prospecting licence for exploration, whereas the exploration should have been nearing completion,” the letter said.
The letter further said, “As per the allocation letter the allocation/mining lease of the coal block may be cancelled on the following grounds: unsatisfactory progress of implementation of their end-use sponge iron plant/power plant; unsatisfactory progress in the development of coal mining project and for breach of any of the conditions of allocation mentioned above”.
CESC is in a piquant situation. “Procedural delays have landed us in this spot,” company officials said. CESC had approached the state government in April 2008. According to the rule, the state government puts it up for approval (no objection) from the central government. The state government thereby issues the prospecting licence.
In this case the central government took some time to give its green signal owing to the Lok Sabha elections and, by the time it came to the Jharkhand government, President’s rule was imposed in the state. Apparently the current governor wants an elected state government to take a decision on the matter.
A CESC official said, “Seeing such delays, we had raised the issue and appraised the central government and the chief secretary of Jharkhand on September 14, 2009, almost 10 days before the current notice was issued. We will reiterate the same thing once again.”
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