Scrapping of block in J’khand to hit its 1,200-MW Mahan power plant in MP
Essar Power is likely to lose the Tokisud coal mine it had won in a highly competitive and aggressive auction due to non-payment of the upfront amount, government officials said.
The scrapping of the coal block in Jharkhand will impact the company's 1,200-MW Mahan power plant in Madhya Pradesh, which has been shut for several years. Mahan's unit-I had begun operations in April 2013. But nonavailability of coal forced the company to suspend operations. Mining licence for an attached coal block was cancelled by the Supreme Court in October 2014.
The coal ministry is likely to scrap allotment of the mine to the company, citing default in payment of `17.58 crore installment that was due in March this year, a senior coal ministry official said.
The ministry had sent a show-cause notice to the company in May. Essar Power has also not been able to pay the Jharkhand government to secure mining lease for Tokisud coal block executed in its name. The state government has denied extension of time to the company for payment of dues, said the official quoted above, adding that firm has acknowledged difficulty in raising funds from lenders in its response to the show-cause notice.
An Essar spokesperson said that the firm has been facing some legal and technical issues post allocation of the Tokisud block. “Until these issues stand resolved, the company won't be in a position to start developmental and mining activities and, hence, mining lease could not be executed,” he added.
The company has highlighted the issues in its monthly report to the coal ministry and in review meetings done by the ministries of coal and power along with the state government. “The company still awaits for appropriate resolution of the issues,” the spokesperson said.
As per the deal, Essar Power had to make the upfront payment for the block in three installments. It paid the first installment of Rs 33 crore on time but defaulted on the second installment of Rs 17.58 crore.
Essar Power is likely to lose the Tokisud coal mine it had won in a highly competitive and aggressive auction due to non-payment of the upfront amount, government officials said.
The scrapping of the coal block in Jharkhand will impact the company's 1,200-MW Mahan power plant in Madhya Pradesh, which has been shut for several years. Mahan's unit-I had begun operations in April 2013. But nonavailability of coal forced the company to suspend operations. Mining licence for an attached coal block was cancelled by the Supreme Court in October 2014.
The coal ministry is likely to scrap allotment of the mine to the company, citing default in payment of `17.58 crore installment that was due in March this year, a senior coal ministry official said.
The ministry had sent a show-cause notice to the company in May. Essar Power has also not been able to pay the Jharkhand government to secure mining lease for Tokisud coal block executed in its name. The state government has denied extension of time to the company for payment of dues, said the official quoted above, adding that firm has acknowledged difficulty in raising funds from lenders in its response to the show-cause notice.
An Essar spokesperson said that the firm has been facing some legal and technical issues post allocation of the Tokisud block. “Until these issues stand resolved, the company won't be in a position to start developmental and mining activities and, hence, mining lease could not be executed,” he added.
The company has highlighted the issues in its monthly report to the coal ministry and in review meetings done by the ministries of coal and power along with the state government. “The company still awaits for appropriate resolution of the issues,” the spokesperson said.
As per the deal, Essar Power had to make the upfront payment for the block in three installments. It paid the first installment of Rs 33 crore on time but defaulted on the second installment of Rs 17.58 crore.
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