Companies which fail to provide quarterly details of progress on their captive coal blocks and end-use projects may face forfeiture of bank guarantee or even de-allocation of blocks unless they are able to come up with plausible explanations for such lapses within a fortnight, a senior government official said.

The system has been instituted by the coal ministry to tighten norms governing allotment of captive coal blocks and ensure that blocks are developed in time to meet the rising demand-supply gap of the feul in the country. Notices have already been sent to some companies.

At present, penal actions are recommended based on annual performance and achievement of milestones.

The move could impact a host of metal and mining companies such as Arcelor Mittal India and GVK Power (they jointly own coal blocks), RPG?s CESC, Jindal Steel and Power, Gagan Sponge Iron, SKS Ispat and Chhattisgarh Mineral Development Corporation, among others.

The coal ministry had earlier expressed displeasure over the tardy progress of these blocks. ?While we constantly review the progress on captive blocks, we now want companies to provide quarterly details on the work on these blocks as well as associated end-use projects to ascertain how serious they are,? said an official of the coal ministry, asking not to be named.

On May 5, the coal ministry had announced its decision to cancel allotment of 14 coal blocks and one lignite block to six PSUs, including NTPC, and three private firms for their failure to develop mines. Last year, the coal ministry had said that it was in the process of issuing show-cause notices to as many as 81 firms for violation of terms and conditions of the coal block developments.

While the ministry gets tough on violators it has also faced alleged charges of favouritism to some companies in the allotment of captive coal blocks. In case of SKS Ispat, as per the documents with this paper, the company was first allocated a coal block at Rawanwara in Chhattisgarh in 2006 for its proposed 600 mw power plant while the actual allocation done by the ministry was for 1,000 mw power plant.

The company did not not take any initiative to open up the mine even after four years of allocation, in spite being served several notices by the coal ministry.

The coal policy specifically says that the production from captive blocks shall commence within 36 months (42 months in case the area is in forest land) of the date of allocation in open cast mine and in 48 months (54 months in case the area fall under forest land) from the date of allocation in case of underground mine.

While SKS Ispat has not shown any progress in the development of the Rawanwara coal block, the coal ministry has gone ahead to allocate two more coal blocks namely Vijay Central and Fatehpur coal blocks to the company in Chhattisgarh.

There has also been a writ petition in the Delhi High Court where it has been alleged that the allocation of the two coal blocks Vijay Central and Fathepur has been done only due to the political interference.

The government has served notices on SKS Ispat and another errant coal company Pushp Steel, asking them to explain why coal blocks allocated to them should not be withdrawn after their failure to develop the reserves within the stipulated time.

The government seriousness over the issue stems from the fact that the country is likely to import about 155 mt of coal on a production of 555 mt in 2011-12 and the expensive imports is likely to rise to over 200 mt (as per Planning Commission) by the end of 12th plan in 2016-17.

While over 208 blocks (with reserves of over 45 billion tonne) have been allocated under captive route, only about 30 are producing less than 40 mt of coal annually.