Need states’ views on bank guarantee: IMG

An inter-ministerial group of the coal ministry has asked some states to furnish their views by Thursday on deducting the bank guarantees provided by certain allocattees before their blocks were cancelled by the Supreme Court, failing which it would unilaterally decide on the matter.

It is learnt that states like Jharkhand and West Bengal have not furnished their views on the quantum of money to be deducted from the bank guarantees (BGs), which has prevented the ministry from taking a final view on the matter. “If the reply is not received by Thursday we would presume that state governments have no comments and action based on the replies submitted by the prior allocatees would be taken,” asenior coal ministry official told The Indian Express quoting IMG as saying in its meeting last week. The panel has also asked the Central Mine Planning and DesignInstitute to furnish its views on BGs by Thursday.

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The ministry had in January this year issued show-cause notices to nearly 130companies including JSW, Jindal Steel and Power and Tata Steel asking them to explain why their BGs should not be deducted for failing to meet stipulated milestones in their allocated coal blocks.

Subsequently, some of these firms had petitioned theDelhi High Court saying the reasons for not being able to develop the allocated mines were beyond their control and mostly on account of delays of the governments and their agencies. They had also argued that BGs were in the nature of performance guarantees and following cancellation of the mines by the Supreme Court in September, invocation of the BGs would not be justified. Hence, they should be released in favour of the respective companies, the firms had argued in their petition to the court.

The IMG headed by coal ministry’s additional secretary A K Dubey which met to consider the issue of deducting BGs has recommended that the coal controller organisation (CCO) should be tasked to prepare a blueprint by Saturday “calculating the BG amount to be deducted” based on the comments from states and CMPDI against the slippages vis-a-vis the terms and conditions of allocation letters issued to respectivecompanies,” the official said. The IMG had met in the backdrop of an impending hearing of one of the petitions on BGs in the Delhi high court on April 30.

For coal blocks allocated prior to the introduction of BGs and where there was no condition of BGs in the allocation letter of a particular coal block under review, “such cases may not be reviewed since no effective mechanism is available to ensure submission of BGs and these coal blocks are already cancelled and the matter now becomes redundant,” the IMG has suggested. The ministry has no ballpark estimate of the total amount of money deposited as BGs as they vary from mine to mine and also mineable reserves.

Deduction for missing key milestones

* The ministry had in January this year issued show-cause notices to nearly 130companies including JSW, Jindal Steel and Power and Tata Steel asking them

to explain why their BGs should not be deducted for failing to meet stipulated milestones in their allocated coal blocks.

* It is learnt that states like Jharkhand and West Bengal have not furnished their views on the quantum of money to be deducted from the bank guarantees (BGs).

http://indianexpress.com/article/business/business-others/need-states-views-on-bank-guarantee-img/2/

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