India reclaims 31 coal blocks from private firms over delay

NEW DELHI/BHUBANESWAR Wed Feb 19, 2014 8:50pm IST

1 of 2. Labourers work at a coal warehouse in Siliguri April 8, 2009.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics


Border Security Force (BSF) soldiers ride their camels as they rehearse for the "Beating the Retreat" ceremony in New Delhi January 27, 2015. REUTERS/Ahmad Masood

"Beating The Retreat" Rehearsals

Rehearsals are on for "Beating the Retreat" ceremony which symbolises retreat after a day on the battlefield, and marks the official end of the Republic Day celebrations.  Slideshow 

NEW DELHI/BHUBANESWAR (Reuters) - The coal ministry is taking back 31 coal blocks allocated to private firms including the Tata group and Jindal Steel and Power (JNSP.NS) over delays in developing them, jeopardising billion-dollar projects and inviting legal action.

The recalls, coupled with delays in approvals for several large projects such as steel plants by POSCO (005490.KS) and ArcelorMittal (ISPA.AS) in eastern India, renew concerns that the country will struggle to attract much needed private investment in the infrastructure sector.

The ministry, reviewing some 61 coal blocks allocated over the past decade that have not started production yet, announced on Tuesday it was reclaiming about half as companies have failed to meet milestones. The companies say delays in getting some government clearances hampered work on the blocks.

"The ministry has already sent notices to a number of companies about the de-allocation," coal ministry spokesman N.C. Joshi said on Wednesday. "Some others will be intimated soon."

The government periodically reviews the status of coal projects and has previously also reclaimed allocated blocks. The de-allocated blocks will be given to state-owned Coal India Ltd (COAL.NS) for the time being and may later be offered to new developers, Joshi said.

The Tata group, in partnership with South Africa's Sasol Ltd (SOLJ.J), was planning to invest $10 billion in a project to convert low-quality coal into oil starting 2018. The joint venture (JV) was to use coal from the North of Arkhapal and Srirampur coal block in eastern Odisha state.

The JV filed a petition in the Delhi High Court on Wednesday against the de-allocation, following which the court asked the government not to proceed with its move, a spokesman for the JV, Debasis Ray, told Reuters. A copy of the court order could not be obtained immediately by Reuters.

"To develop the block, the JV has been awaiting the mandatory prospecting licence from the government, which has not been issued till date and without which no action can be taken on the block," Ray said.

Jindal Steel too was working on a similar project in Odisha and had spent about $12 million out of total planned investment of $10 billion.

The company, whose chairman Naveen Jindal is a member of parliament from the ruling Congress party, said it will also take the government to court for the decision to take back the Ramchandi block.

Jindal Steel was allocated the block in early 2009 for it to produce 80,000 barrels of oil per day. The Tata-Sasol venture was also planning to ramp up output to 80,000 barrels per day within a year from starting, a Sasol executive said in 2010. (

"Jindal Steel opines that it is the most unfair decision. We'll challenge this decision in a court of law," a company spokesman told Reuters, declining to give a timeline by when the company will approach a court.

Rajani Kant Singh, the steel and mines minister of Odisha called the federal government's move "unfortunate" as it came at a time when "procedural maintenance was underway".

Jindal Steel's shares closed up about 7 percent on Tuesday. Investors were relieved that a big capital-intensive project was likely to be cancelled following the de-allocation, said Angel Broking analyst Bhavesh Chauhan. The shares fell 2.8 percent on Wednesday.

The Jindal Steel spokesman declined to comment on the fate of the coal-to-liquid project.

Chauhan of Angel Broking in Mumbai said that only a handful of companies whose coal blocks will be taken away have invested in the projects, which means there would not be much of an impact for investors.

Apart from the companies working on the coal-to-liquid projects, Adani Power Ltd (ADAN.NS) is one of the large companies whose coal blocks will be taken back. An Adani spokesman could not be reached immediately for comment .

(Editing by Muralikumar Anantharaman)


After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Reuters Showcase

Telecom Sector

Telecom Sector

India postpones mobile airwave auction to March 4.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 



China's yuan breaks into the world's top five as payment currency - SWIFT.  Full Article 

India’s Male Tenor

India’s Male Tenor

India’s lone male tenor wants to ‘Indianise’ opera  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage