Govt may cancel coal mine in Jharkhand allotted to Essar

Stating that the performance of Essar Power has not been up to the mark with regard to making operational a coal mine in Jharkhand, a senior official said the government may cancel the coal block allotted to firm once the court stay on the mine is vacated.

"In Essar's (Essar Power) matter there is an injunction by Hon'ble court prohibiting the government to take any coercive action against them. When the injunction is vacated, we will take appropriate action against them in terms of the agreement which may include even cancellation (of Tokisud North coal block) ," Coal Secretary Susheel Kumar told PTI.

Tokisud North mine, having geological reserves of 103.24 million tonnes (MT) and extractable reserves of 51.97 MT, was bagged by Essar Power MP Ltd in the coal mines auction held earlier.

"There is some stay of the court and the day when the stay will be vacated we will cancel that (coal mine allotment) because they have not performed," he added.

The mine was scheduled to begin operations in fiscal 2015-16, a coal ministry official said.

Kumar also warned the companies which were allotted coal blocks during the auctions to perform well else they would end up losing the mines.

"So whosoever is not performing (their coal blocks) will be cancelled," the secretary said.

Faced with delays in key approvals and sudden change in tariff terms, Essar Power had earlier said that it has decided to surrender the Tokisud North coal block in Jharkhand in which it has already invested Rs 490 crore.

The coal ministry had issued a termination notice to the Tokisud North coal mines and asked them to forfeit Rs 261 crore bank guarantee for non-payment of upfront amount for the block.