The revival of the long closed Loyabad coal mine in Dhanbad’s Sijua Area has been stalled after Vensar Construction Company Ltd. withdrew from its mining contract with Bharat Coking Coal Limited (BCCL). The project, awarded on Mine Developer and Operator (MDO) revenue sharing basis, with an aim to produce 1.285 million tonnes annually, with a total output of 25.485 million tonnes.
First Revenue Share MDO Contract Scrapped
BCCL had signed an MoU with Vensar under which the company was to operate on a 7.29% revenue share model. This was the first time in Coal India’s history that a project was awarded under such terms, drawing attention from the Ministry of Coal. However, before operations could begin, Vensar surrendered the tender and BCCL had to formally cancel the contract.
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Contract Surrender Due to Profitability Concerns
According to our sources, the contractor said that the Detailed Project Report (DPR), which suggested the mine would not generate output sufficient to ensure profitability. The company argued that the project carried risks of financial losses and therefore decided to step back. This decision, coming 17 months after the Letter of Award was issued in March 2023, has left the project in limbo.
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The cancellation of the agreement has dashed expectations of renewed employment and economic activity in the Loyabad region. It has also raised doubts about BCCL’s other revenue-sharing projects, as contractors may back out. Once hailed as a pioneering model in Coal India is now being viewed with caution, raising questions on the commercial viability of similar ventures.
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