Odisha Mining Corporation (OMC) today said its joint venture agreement with Delhi-based Sainik Mining and Allied Services Ltd (SMASL) has been cancelled.

The joint venture between OMC and SMASL was signed in 2003 to develop Utkal-D coal block having a reserve of 145 MT in Angul district. It had been alleged that the joint venture agreement was made in violation of the Coal Mines (Nationalisation) Act-1973.

“As there has been no progress in coal mining in 10 years, we have cancelled the joint venture,” OMC Chairman-cum-Managing Director Saswat Mishra told reporter’s here.

Kalinga Coal Mining Pvt Ltd (KCMPL), a joint venture company was formed with a 26:74 equity holding between OMC and SMASL in 2003. The OMC has already informed SMASL about its action on cancellation of the joint venture, the CMD said.

Meanwhile, a PIL has been filed in the Supreme Court over OMC’s deal with SMASL for developing Utkal-D coal block, where 74 per cent stake in the joint venture has been conceded to the private player.

Clarifying OMC’s action of giving 74 per cent stake to a private player, Mishra said: “The financial condition of the OMC in 2002-03 was very bad. Even we were depending on loan to pay salary to employees. Therefore, the corporation had no alternative than giving 74 per cent stake to a private player, which agreed to bear all the cost for coal mining.”

However, he said, with improvement of OMC’s financial condition over the years and deposit of about Rs 5,000 crore in bank account, efforts were made to enhance OMC’s equity share from 26 per cent to 51 per cent. But, this was not possible due to various reasons. Hence, OMC decided to cancel the pact, Mishra said.

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