Coal Ministry Directs TVNL to Submit Bank Guarantee to Avert De-allocation of Rajbar Block

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Researched by Industrial Info Resources India (Delhi, India)--Miffed at the sluggish progress on the development of the Rajbar (E&D) coal block, allocated to the Government of Jharkhand (GoJ)-owned Tenughat Vidyut Nigam Limited (TVNL) (Ranchi, Jharkhand), India's Ministry of Coal (MoC) (New Delhi) has again threatened to cancel allocation of the block unless the power utility submits a Bank Guarantee worth of $39 million.

The coal block was allotted to TVNL in August 2006 to meet the fuel requirement of its proposed Tenughat thermal power station expansion and prospecting license was granted in May 2010. Due to recurrent lapses in meeting the production milestones MoC had issued two Show Cause notices along with a warning for de-allocation during 2010-2012.

According to MoC, the Inter-Ministerial Group set up to review the progress of development of allocated coal blocks has, however, recommended allowing TVNL to continue holding the Rajbar (E&D) coal block on submission of the Bank Guarantee within a period of three months from date of issue of the recent notification, considering the fact that the Rajbar (E&D) mine is a regionally explored block which takes more time and that the ownership of TVNL is under dispute between the State Government of Bihar and Jharkhand. IMG did not find it appropriate to de-allocate the block at this stage, despite the fact that TNVL missed all milestones for the development of the block.

The IMG, considering the terms and conditions of the allocation and TVNL's reply to the show-cause notice and its presentation on the progress of the project, recommended submission of Bank Guarantee equivalent to one year's royalty for adherence to the milestones within a period of three months. IMG also categorically stated that the block may be de-allocated if the project proponent fails to submit the Bank Guarantee within the stipulated time. Subsequently, the government has accepted recommendation of the IMG and has directed TVNL to furnish the requisite Bank Guarantee to Coal Controller's Organisation to avoid de-allocation.

Recently, the ministry has slapped a Show Cause notice on another state of Jharkhand-run enterprise Jharkhand State Electricity Board (JSEB) (Ranchi, Jharkhand) for delaying production from Banhardih coal block in the state.

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