Coal news and updates

Government to award all 204 coal blocks by March 2016, says Coal Secretary Anil Swarup

The Ministry of Coal is bracing for an action-packed year, with plans to open up the sector first to state-run firms and then to private companies, completing allotment of all 204 captive mines cancelled by the Supreme Court, auctioning fuel tieups with Coal India and taking measures to double Coal India's output to 1 billion tonnes by 2019, coal secretary Anil Swarup told ET in an exclusive interview. In an interview with ET's Sarita C Singh after Parliament passed the Coal Mines Special Provisions Bill, 2015, Swarup also said the new legislation allows the government to continue auctioning coal blocks to private companies with the next round consisting of about 16 coal blocks set to start end-April. Edited excerpts:

How will the new legislation change the coal sector?

The coal block auction process will continue. This would have otherwise come to a halt after April 5 but for the clearance of the coal bill. The government will in due course consider allowing commercial mining once the requirements of sectors that are in urgent need of coal are fulfilled. A lot of investment has gone in projects relating to power, steel, aluminium and the like but they don't have coal. So it is felt that before opening up the coal sector, their needs should be met.

Has a timeline been proposed for commercial mining?

We are moving step by step. First, we experimented with e-auction with enduse stipulation. This has gone off well. Now, we plan to look at commercial mining by state entities. Thereafter, we would look at commercial mining by private sector. We are thinking of giving mines to state entities on non-end use basis. The states can then provide coal to households, small industries and brick kilns who cannot mine on their own but do require coal. Ownership of the state corporation has to be at least 74% of the entity that will mine.

How many blocks will be given to state utilities for commercial use?

We are in the process of identifying a few blocks that could be given to state entities. We have not zeroed in on those blocks yet but these could be allotted to such states as are hosts to those mines like Odisha, Chhattisgarh, Jharkhand and West Bengal. Such allocations should happen within next two months.

Are you moving towards allowing foreign companies into mining?

There is a logical movement toward enabling professional commercial mining. Earlier, the problem with the state government was that they had given ownership of mines to the private sector. In the proposed dispensation, the state government would obviously not mine by itself. It will engage an expert agency to mine. So the private sector at this stage will come in as a miner and not as an owner. The next logical step would be that they could own that mine. We are going step by step, making necessary assessments at each stage before opening up the sector for commercial mining.

When is the next tranche of coal mine auction likely and when do you expect to complete awarding all 204 mines cancelled by the Supreme Court?

We are almost ready with the next tranche, which will consist of around 20 mines. These mines would also have end-use stipulation. Number of clearances for these mines are already in place. The auction process should commence sometime in April. We expect to award all 204 coal blocks by March 2016. Now that the legislation is through, we would be able to do most of the work in the next financial year.

Post-March 31, who will operate producing coal blocks that could not be awarded for various reasons, including court cases?

The government has the option of appointing a custodian for blocks that are operational but could not be auctioned or where a suitable bidder could not be found. The government can allot it to an entity like Coal India, which can continue operations. We will take a call in a couple of days. There are around seven such blocks.

At the time of CAG report, the coal ministry had maintained that no two coal blocks are comparable. Then, what is the basis of cancelling the auction for three blocks that received low bids against other mines?

Though these blocks were not exactly comparable with other blocks, we know the quality and quantum of coal. There is an acceptable variation but if the variation is as stark as was evident in some of the bidding, we have to consider and take a call. If we accept bids with stark variations, we can be questioned. Going by the history of this ministry and the history of the manner in which coal has been handled, you cannot ignore such stark "outliers".

You cancelled three auctioned coal blocks. Do you deny cartelisation?

We have not investigated anything. We have gone into the data on record and we have found that there were indeed some stark outliers. There was no justification for such variations and the extent of such variation.

source: http://economictimes.indiatimes.com