Govt to deduct bank guarantee of 2 cos for Bijahan block

The government has decided to deduct bank guarantee to the extent of Rs 6.49 crore with regard to a coal block in Orissa jointly allocated to Bhushan and Mahavir Ferro Alloys for delays in production.

Also read: Power cos may buy coal from sources other than CIL: Govt

"It has been decided to deduct the bank guarantee furnished by the allocatee companies. The Bank Guarantee (BG) to the extent of Rs 6.4995 crore be deducted and deposited with the government," the coal ministry said in a letter to both companies.

The Bijahan coal block was allocated in January 2006 toBhushan Ltd as leader and Mahavir Ferro Alloys as associate to  meet the coal requirement of 4 mtpa (million tonnes per annum) and 1.26 mtpa respectively. The deduction of BG was decided after the recommendations made by the Inter-Ministerial Group (IMG) with regard to the coal block.

"Taking into account all factors including substantial progress and investment, the IMG did not consider it appropriate to recommend deallocation of the coal block at this stage... "Taking all factors into account, the IMG recommends deduction of BG as per the formula provided in the allocation letter from the normative date of production i.e. November 2, 2010," the letter said.

The IMG, under the chairmanship of Additional Secretary (Coal) which was set up this year, was given the mandate to review the progress of development of allocated coal blocks and associated end-use projects and to recommend action, including deallocation, if required. The IMG has members from ministries, including Steel, and Power.