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Essar loses coal mine, fail to clear payment

Essar Power said it has approached the coal ministry to clear the dues

Policy Pulse
Publish Date: Sep 24 2016 11:38AM | Updated Date: Sep 24 2016 11:38AM

Essar loses coal mine, fail to clear payment

The coal ministry has issued a termination notice to Essar Power ending the contract for development of the Tokisud North coalmine in Jharkhand for not making the upfront payment for the block. 

 

As per norms, Essar Power will be barred for a year from bidding in coal block auctions. The ministry is also considering stern action against the company, including disqualifying it from Coal India supplies, said a government official. 

 

With coal minister Piyush Goyal's stand to prevent private companies from derailing the auction process or reneging on contracts. Essar Power said it has approached the coal ministry to clear the dues.

 

The company said it has invested Rs 450 crore on development by way of cash payments and performance guarantees and has made all the necessary efforts to commence mining at the coal block. 

 

As reported in Economic times, "Essar would like to state that the company has recently approached to the coal ministry stating that Essar will be paying Rs 17 crore towards the final installment and will execute the mining lease for the mine," the company said. 

 

"We are still and awaiting for their response and have not been able to commence any development work, as Essar could has not received important data and documents pertaining to Rehabilitation and Resettlement settlements,” they further said. 

 

"The termination notice will come into effect from October 6. The firm's Rs 261-crore bank guarantee will also be forfeited," a government official said. A decision on the allocation of Tokisud mine will be taken in due course, he said.