New Delhi, Dec 18 (IANS): The coal ministry has said it has cancelled allotment of a coal block in Madhya Pradesh to Jindal Steel and Power (JSPL) and Monnet Ispat and Energy for their failure to develop it.

"The companies have failed to develop the same (coal block) as per the milestones prescribed without any valid reasons for the delay, it has been decided to de-allocate the Urtan North coal block in the state of Madhya Pradesh allocated to Jindal Steel & Power Ltd and Monnet Ispat & Energy Ltd," the ministry said in a letter on Dec 17 to both firms.

The inter-ministerial group (IMG) constituted last year to review the progress of coal blocks allocated to firms for captive use had recommended de-allocation of the block.

"Order regarding deduction and encashment of proportionate BG (Bank Guarantee) linked to the milestones set for development of the block as per the allocation letter would be issued separately after receipt of calculation of amount from the office of coal controller," the coal ministry wrote.

The coal block was allocated to both the firms in 2009 to service the needs of their sponge iron plants.