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MAY 17 2016

Government to issue notices to Essar Power, Monnet Ispat over dues

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 17th MAY 2016

The government will issue notices to Essar Power for not paying dues to Jharkhand over the Tokisud North coal block and Monnet Ispat & Energy for late payment of upfront fees on a mine it won in auction, a senior official said. The show-cause notices will ask the companies why their proportionate bank guarantees should not be forfeited, the official said. Essar Power has not been able to pay to the Jharkhand government to get the mining lease for Tokisud coal block executed in its name. The Tokisud coal mine was the most expensive of those bid out to the power sector the company won the producing coal block, bidding an aggressive Rs 1,110 per tonne of coal.

 The Tokisud coal block belonged to GVK Power before the Supreme Court cancelled its permit, along with those of several other companies citing irregularities in allotment. This was among the blocks auctioned in February last year in the first round post the court order. It has annual production capacity of 2.32 million tonnes and rail connectivity within 2.5 km.

 Essar Power MP paid the initial amount of Rs 147 crore to the coal ministry while signing the agreement in March 2015, apart from two instalments of upfront payments amounting to Rs 53 crore as per schedule, a spokesperson said. The company has sought certain clarifications from the government and once those are received, will pay the third and final instalment of Rs 18 crore, the spokesperson added. No comment was available from Monnet Ispat at press time on Monday. Monnet Ispat & Energy has delayed payment of an instalment over the Gare Palma IV/7 coal block in Chhattisgarh by 66 days, and the coal ministry is likely to impose a penalty for this on the company, the official said.

 Both companies will be given reasonable time to respond to the notices, he said. If they do not respond in time or produce a satisfactory reply, their proportionate bank guarantees could be forfeited. Monnet Ispat had won the Gare Palma IV/7 coal mine reserved for non-power companies at Rs 2,619 per tonne.

 The mine is estimated to have extractable reserves of 52.98 million tonnes. The official said the company had defaulted on the second instalment of the additional levy of Rs 295 per tonne imposed by the Supreme Court on operational blocks.

 

 

Tags

Jharkhand Monnet Ispat & Energy Ltd Coal Energy Coal Block Essar Essar Steel Essar Oil Ltd. Power MP essar power

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