* Tata group, Jindal Steel, Adani Power among those whose
coal blocks reclaimed
* Coal ministry reviewed coal blocks that have not started
* Tata-Sasol says court asks govt not to proceed with
* Jindal says will take government to court over move
(Adds Tata-Sasol comment)
By Krishna N Das and Jatindra Dash
NEW DELHI/BHUBANESWAR, India, Feb 19 India's
coal ministry is taking back 31 coal blocks allocated to private
firms including the Tata group and Jindal Steel and Power
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 and
ArcelorMittal 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
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
, 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
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. (r.reuters.com/dux86v)
"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
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 is one of the large
companies whose coal blocks will be taken back. An Adani
spokesman could not be reached immediately for comment .
($1 = 62.2275 Indian rupees)
(Editing by Muralikumar Anantharaman)