New Delhi: Over the past year, Essel Mining & Industries Limited has given up two large mining projects from public sector units in India, which aimed to produce coal and reduce the country’s dependence on imported coal. Due to the failure of Aditya Birla Group’s mining arm to follow the correct process, Coal India subsidiary South Eastern Coalfields Limited (SECL) has blacklisted Essel Mining from participating in its tenders for a year. Additionally, Essel Mining’s constant delays in project execution have resulted in the failure of another state-owned enterprise, Andhra Pradesh Mineral Development Corporation Limited (APMDC), to operationalize Madanpur South Coal Block in Chhattisgarh. Essel Mining’s failure to execute two coal blocks will lead to further shortage in India this summer.
Madannagar Coal Block
In December 2022, SECL had issued a Letter of Acceptance to Essel Mining for the mine development and operation (MDO) contract of Madannagar Coal Block. After Essel Mining’s failure to furnish a ‘performance bank guarantee’ and execute the Mining Agreement to formalise the contract, SECL terminated its Letter of Acceptance, forfeited its ‘earnest money deposit’ of Rs 2 crore and subsequently also blacklisted Essel Mining for one year from participating in its tenders. Madannagar Coal Block is valued at Rs 27,000 crore for the life of the mine.
“You were instructed to deposit the PSD amount and execution of agreement within 90 days from the date of issue of LOA but you neither submitted the PSD amount and not executed the agreement within the time period even after issuance of several letters. Further, you have been issued a final notice for intention for termination of contract with forfeiture of bid security / EMD, debarring for a period of one year with an advise to present your
defece withi 15 days from the date of issuance of the letter in writting of in person. But neither you have submitted any letter in writing nor contacted this office for defence,” read the SECL’s letter to Essel.
The future of Madannagar Block hangs in the balance as SECL lacks the necessary expertise and resources to develop it. An experienced private MDO contractor is needed to support the project. Following the failure of Essel, SECL is now compelled to restart the tendering process that may further delay the opening of Madannagar Coal Block.
Madanpur South Coal Block
Despite appointing Essel Mining and Industries Limited as a contractor five years back in 2019, the APMDC has failed to operationalise Madanpur South Coal Block in Chhattisgarh.
The Government of India allocated Madanpur South Coal Block with a total Geological Reserve of 191.77 million tonnes in 2016. The stalled project has resulted in loss of hundreds of crores to the state governments of Andhra Pradesh and Chhattisgarh in terms of profits and various levies respectively.
The situation worsened when previous Congress ruled Chhattisgarh government expanded the area of the Lemru Elephant Corridor, restricting operations in the region to only the operational blocks. As a result, the already defunct block like Madanpur South Coal Block may not see the light of the day anymore.
Industry sources are attributing the failure of APMDC in Chhattisgarh to the company’s poor decision-making in hiring capable contractor. It is worth mentioning that APMDC has brought in DLR Prasad, an advisor from the private sector.
Essel’s decision to abandon two major mining projects is expected to worsen the shortage of coal
Over the past year, Essel Mining & Industries Limited has given up two large mining projects from public sector units in India, which aimed to produce coal and reduce the country’s dependence on imported coal. Due to the failure of Aditya Birla Group’s mining arm to follow the correct process, Coal India subsidiary South Eastern Coalfields Limited (SECL) has blacklisted Essel Mining from participating in its tenders for a year. Additionally, Essel Mining’s constant delays in project execution have resulted in the failure of another state-owned enterprise, Andhra Pradesh Mineral Development Corporation Limited (APMDC), to operationalize Madanpur South Coal Block in Chhattisgarh. Essel Mining’s failure to execute two coal blocks will lead to further shortage in India this summer.
Madannagar Coal Block
In December 2022, SECL had issued a Letter of Acceptance to Essel Mining for the mine development and operation (MDO) contract of Madannagar Coal Block. After Essel Mining’s failure to furnish a ‘performance bank guarantee’ and execute the Mining Agreement to formalise the contract, SECL terminated its Letter of Acceptance, forfeited its ‘earnest money deposit’ of Rs 2 crore and subsequently also blacklisted Essel Mining for one year from participating in its tenders. Madannagar Coal Block is valued at Rs 27,000 crore for the life of the mine.
“You were instructed to deposit the PSD amount and execution of agreement within 90 days from the date of issue of LOA but you neither submitted the PSD amount and not executed the agreement within the time period even after issuance of several letters. Further, you have been issued a final notice for intention for termination of contract with forfeiture of bid security / EMD, debarring for a period of one year with an advise to present your defece withi 15 days from the date of issuance of the letter in writting of in person. But neither you have submitted any letter in writing nor contacted this office for defence,” read the SECL’s letter to Essel.
The future of Madannagar Block hangs in the balance as SECL lacks the necessary expertise and resources to develop it. An experienced private MDO contractor is needed to support the project. Following the failure of Essel, SECL is now compelled to restart the tendering process that may further delay the opening of Madannagar Coal Block.
Madanpur South Coal Block
In December 2022, SECL had issued a Letter of Acceptance to Essel Mining for the mine development and operation (MDO) contract of Madannagar Coal Block. After Essel Mining’s failure to furnish a ‘performance bank guarantee’ and execute the Mining Agreement to formalise the contract, SECL terminated its Letter of Acceptance, forfeited its ‘earnest money deposit’ of Rs 2 crore and subsequently also blacklisted Essel Mining for one year from participating in its tenders. Madannagar Coal Block is valued at Rs 27,000 crore for the life of the mine.
“You were instructed to deposit the PSD amount and execution of agreement within 90 days from the date of issue of LOA but you neither submitted the PSD amount and not executed the agreement within the time period even after issuance of several letters. Further, you have been issued a final notice for intention for termination of contract with forfeiture of bid security / EMD, debarring for a period of one year with an advise to present your defece withi 15 days from the date of issuance of the letter in writting of in person. But neither you have submitted any letter in writing nor contacted this office for defence,” read the SECL’s letter to Essel.
The future of Madannagar Block hangs in the balance as SECL lacks the necessary expertise and resources to develop it. An experienced private MDO contractor is needed to support the project. Following the failure of Essel, SECL is now compelled to restart the tendering process that may further delay the opening of Madannagar Coal Block.
Madanpur South Coal Block
Despite appointing Essel Mining and Industries Limited as a contractor five years back in 2019, the APMDC has failed to operationalise Madanpur South Coal Block in Chhattisgarh.
The Government of India allocated Madanpur South Coal Block with a total Geological Reserve of 191.77 million tonnes in 2016. The stalled project has resulted in loss of hundreds of crores to the state governments of Andhra Pradesh and Chhattisgarh in terms of profits and various levies respectively.
The situation worsened when previous Congress ruled Chhattisgarh government expanded the area of the Lemru Elephant Corridor, restricting operations in the region to only the operational blocks. As a result, the already defunct block like Madanpur South Coal Block may not see the light of the day anymore.
Industry sources are attributing the failure of APMDC in Chhattisgarh to the company’s poor decision-making in hiring capable contractor. It is worth mentioning that APMDC has brought in DLR Prasad, an advisor from the private sector.
Due to the rising electricity demands, the government of India has set an ambitious target to produce one billion tonnes of coal annually. However, the failure to utilise Madannagar Coal and Madanpur South coal blocks, despite Essel Mining’s appointment as a contractor in 2019, could have serious ramifications for India’s energy security and economic growth, according to an energy sector expert.
