Coal Ministry of India has decided to terminate the Coal Mine Development and Production Agreement (CMDPA) and vesting order of Jaypee Cement Corporation with respect to Majra coal mine, in its official letter dated 18 Jul’18.
The action was taken against the cement company in the aftermath of violation of the parameter which states that “Extractable reserves of the Coal Mine should not exceed 150% of the annual coal requirement of the specified end use plants, taken over for a period of 30 years, less the requirement of coal for such specified end use plants met from any other coal mine allotted to the bidder”.
Jaypee Cement Corporation had signed CMDPA with respect to Majra coal block to meet the requirement of its 4 end user plants – one cement plant and three captive thermal plants.
However, with the sales of its three end user plants to Ultra Tech Cement as on 29 Jun’17, Jaypee Cement’s remaining captive power plant at Shahabad location has been left with an annual coal requirement of 8.05 MnT. The extractable reserve of the Majra mine accounts 14.92 MnT, which exceeds 150% of the coal requirement at the remaining end user plant.
| End Use Plants Sold to Ultra Tech Cement | ||
| Name | Capacity | Coal Entitlement |
| Jaypee Balaji Cement Plant | 1 X 3.65 MnTPA | 23.04 MnT |
| Captive Thermal Plant-Jaypee Balaji Cement | 1 X 35 MW | 6.63 MnT |
| Captive Thermal Plant-Jaypee Balaji Cement | 1 X 25 MW | 4.73 MnT |
| Remaining End User Plant | ||
| Captive Thermal Plant-Jaypee Shahabad Cement Plant | 1 X 60 MW | 8.05 MnT |
The negligence of Jaypee cement to ensure continued compliance with eligibility criteria of the coal block has been regarded as a major lapse by the coal ministry.
Earlier, the coal ministry had served a show clause notice to Jaypee Cement in order to enquire about the possible sale of the plants as on 7 Mar’18, to which the cement company had informed that the actual sale of end user plant had not taken place and were in compliance with the CMDPA.
The cement company was also instructed to communicate any further development in this regard.
Despite various letters and notices, the intimation of sales of the plant came out as a breach of term of the CMDPA, against which the ministry has decided to terminate the agreement.
The ministry has issued a letter to Japyee Cement as on 18 Jul’18, which upon completion of 15 day notice period would accord termination of CMDPA and vesting order for Majra mine, whilst the performance security and other payments made would also be forfeited.
Leave a Reply