The coal ministry has slapped showcause notices on the state-owned power companies of Punjab, Karnataka and West Bengal for their alleged failure to follow the due process of tendering in engaging Eastern Minerals and Trading Agency (EMTA) as the mine development operator (MDO) for the mines allotted to them.
As per the tender documents for coal block re-allocations issued after the cancellation of allocation by the Supreme Court, competitive bidding process should be followed for selecting any entity as MDO. “We have appointed EMTA on nomination basis,” a Karnataka Power Corporation official told FE.
Confirming the receipt of notice from the coal ministry, the official added that a reply would be dispatched after consulting all senior officials.
Although officials from the Punjab and West Bengal power companies could not be contacted immediately, government sources confirmed these states too had appointed EMTA without following the prescribed process laid out in the coal block allocation rules.
Moreover, the Supreme Court on July 21 had issued contempt notice to EMTA and other entities for failing to pay the court-imposed levy of Rs 295/tonne of coal mined before the verdict was announced for cancellation of coal blocks on September 24 last year.
EMTA’s liability to pay the levy arose from its association with the three states as the joint venture partner. In each of the three JVs, the private miner had 76% stake while the respective state had 24% ownership. The JVs mined coal from the blocks allotted to these states for their thermal power plants.
Although the states were initially asked to pay the levy in proportion to the stake in JVs, a modification in the Coal Mines Ordinance (now replaced by a law approved by Parliament) put the entire burden on the third-party (EMTA) contracted by mine licensees to execute the lease. This made EMTA liable for paying nearly Rs 3,000 crore to the Centre.
As per the Supreme Court order, the companies had to pay the penalty for coal extracted till October by December 31 to be eligible to participate in the auctions. For operational mines, which had been allowed to operate till March 31, the penalty for excess coal mined till March 31, 2015, was to be paid by June 30.
In the process of coal block allotment to state-run power companies, Punjab was allotted one operational mine while Karnataka and West Bengal were allotted six producing mines each.