Govt to deduct Rs 22 cr bank guarantee from JV of JSW Steel
New Delhi: The government has decided to deduct Rs 22 crore bank guarantee from a joint venture company of JSW Steel, Jindal Stainless and others for failing to develop a coal mine in Odisha on time.
"The Bank Guarantee (BG) as calculated by Coal Controller's office to the extent of Rs 22.24 crore be deducted after 4 weeks," Coal Ministry has said in a notice issued to the JV companies including Shyam DRI on July 10.
Utkal-A and Gopal Prasad West combined coal blocks were alloted to the JV in November, 2005 for end-use plants besides to Mahanadi Coalfields for commercial use. The JV has spent Rs 71.30 crore on the block.
The notice for deduction of the BG has been issued as per recommendations of an Inter-Ministerial panel, which reviewed the progress of block and found that there were slippages in achieving the milestone.
The pending milestones for development of the block include forest clearance, completion of land acquisition and coal production.
While reviewing the progress of the block the panel in 2010 served a show cause on the JV for de-allocation.
However, taking into account all the factors including substantial progress and investment made since then, the Inter-Ministerial Group (IMG) "did not consider it appropriate to recommend de-allocation of the coal block at this stage", the notice said.
As per the notice, JSW steel has reported investment of Rs 25,474 crore, JSW Energy Rs 1,815 crore, Jindal Stainless Rs 8,686 crore and Shyam Metalics Rs 706 crore investment in their end use plants, inclusive of investments in their existing capacities.
"In view of the slippage in milestones, the BG may be deducted for shortfall in production since normative date of production i.e. May 2009," it said.
The review by IMG is part of the government's exercise to ensure that the allocated blocks do not remain unproductive.
Last year, in a similar exercise, the government had issued show cause notices to 58 coal block allocatees and deallocated blocks of some developers. It also deducted bank guarantees for some others.