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India’s Nalco penalized by Coal Ministry for failure to develop allotted coal block
Edited by : AL CIRCLE
2 min read
India’s National Aluminium Company Limited (Nalco) has been slapped on the wrist by the Coal Ministry, which has directed the company to provide a $3.3-million bank guarantee for failure to develop a coal block allotted eight years ago.
An inter-ministerial group (IMG) set up by the Coal Ministry to review the progress of all coal blocks allotted for captive consumption to government and private companies, considered the de-allocation of the block granted to Nalco.
However, following presentations made by the country’s largest integrated aluminium producer before the IMG, the Coal Ministry instead demanded the bank guarantee within three months, or the coal block would be de-allocated.
In a letter issued to the Nalco chairperson and managing director, the Coal Ministry said “ the IMG considered the terms and conditions of allocation, the show cause notice issued and reply along with presentation made by the company”.
“IMG noted that this was a fully explored block and more than eight years had lapsed since date of allotment. Nalco had applied for the block for its proposed captive power plant units in which an investment of Rs 10.27-billion ($193-million) was reported. A further amount of Rs 1.15-billion ($27-million) has been spent on the coal block,” the letter said.
“Taking into account all these factors, IMG did not consider it appropriate to recommend de-allocation of the coal block at this stage. However, in view of slippages in milestones, IMG recommends that the allocatee may be permitted to hold onto the coal block only on submission of a bank guarantee equivalent to one year of royalty for adherence to the milestones and failure of such would the block will be de-allocated,” the coal ministry letter added.
These recommendations of the IMG on Nalco has been considered and accepted by the Indian government, according to the Coal Ministry.
Nalco, which operates bauxite mines, smelters and a 960 MW captive power plant in the eastern Indian province of Orissa, has often been forced to shut down power generating units owing to a coal shortage, which in turn resulted in the fall of production at its smelters by about 78 t/d of aluminium.
The Utkal-E coal block, located in close proximity to Nalco’s plants in Orissa, has an estimated reserve of 70-million tons.
An inter-ministerial group (IMG) set up by the Coal Ministry to review the progress of all coal blocks allotted for captive consumption to government and private companies, considered the de-allocation of the block granted to Nalco.
However, following presentations made by the country’s largest integrated aluminium producer before the IMG, the Coal Ministry instead demanded the bank guarantee within three months, or the coal block would be de-allocated.
In a letter issued to the Nalco chairperson and managing director, the Coal Ministry said “ the IMG considered the terms and conditions of allocation, the show cause notice issued and reply along with presentation made by the company”.
“IMG noted that this was a fully explored block and more than eight years had lapsed since date of allotment. Nalco had applied for the block for its proposed captive power plant units in which an investment of Rs 10.27-billion ($193-million) was reported. A further amount of Rs 1.15-billion ($27-million) has been spent on the coal block,” the letter said.
“Taking into account all these factors, IMG did not consider it appropriate to recommend de-allocation of the coal block at this stage. However, in view of slippages in milestones, IMG recommends that the allocatee may be permitted to hold onto the coal block only on submission of a bank guarantee equivalent to one year of royalty for adherence to the milestones and failure of such would the block will be de-allocated,” the coal ministry letter added.
These recommendations of the IMG on Nalco has been considered and accepted by the Indian government, according to the Coal Ministry.
Nalco, which operates bauxite mines, smelters and a 960 MW captive power plant in the eastern Indian province of Orissa, has often been forced to shut down power generating units owing to a coal shortage, which in turn resulted in the fall of production at its smelters by about 78 t/d of aluminium.
The Utkal-E coal block, located in close proximity to Nalco’s plants in Orissa, has an estimated reserve of 70-million tons.
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