Coalmin penalizes Sunflag for less coal extraction

Nagpur: Ministry of coal has decided to encash a part of bank guarantee (BG) furnished by city-based Sunflag Iron & Steel Company Limited (SISCO) for failing to meet its coal production target from the company’s Belgaon captive mine. Out of Rs 2.39 crore BG, the ministry has asked Coal Controller Organization (CCO) to encash Rs 81 lakh.
The company had been given a target of producing 1.15 million tonnes (MT) from 2007-08 to 2014-15.Sunflag managed to produce 1.058 MT, a shortfall of 0.092 MT or 92,000 tonnes. The mine is no longer with the company as the Supreme Court (SC) cancelled all the captive block allocations.
Sunflag had been allocated Belgaon block for its sponge iron plant in March 2005 and the mine opening permission was given in June 2007. Against normative date of production set by the ministry in September 2009, the company started production in December 2007. However, it started lagging behind the target from 2010-11.
Sunflag did not develop the block as per the timelines in terms of allocation letter. A show cause notice was issued in January 2015 for delay in development of coal block and for not adhering to the milestones chart prescribed.
Sunflag submitted its reply in February 2015 and further information in January 2016. However, inter-ministerial group (IMG) was not satisfied with the explanation. The CCO has been directed to invoke Rs 0.81 crore from the BG furnished by Sunflag and deposit the same in the relevant government account. The remaining BG, is to be returned to the company.