Coal news and updates

House passes Coal Mines (Special Provisions) Bill, 2015

March 23:  The Rajya Sabha, on March 21, passed the Coal Mines (Special Provisions) Bill, 2015 thereby removing any uncertainty related to de-allocation of 2014 coal mines and their subsequent e-auction and also allotment of coal mines for merchant mining purpose.

Earlier, the Lok Sabha had passed this Bill on March 4, 2015. 

The Bill will replace the Ordinance issued by the government, the first as on October 21, 2014 and then re-promulgated on December 26, 2014, after the apex court cancelled the allocation of 204 blocks.

Moving the Bill, Coal Minister Piyush Goyal said it aims at transparent allocation or auction of coal mines.

Objectives of the Bill:

• To provide for allocation of coal mines and vesting of the right, title and interest in and over the land and mine infrastructure to successful bidders and allottees with a view to ensuring continuity in coal mining operations and production of coal.
• To take immediate action to auction or allot coal mines to minimise the impact on core sectors such as steel, cement and power, which are vital for the development of the nation.
• To amend the Coal Mines (Nationalization) Act, 1973 and the Mines and Minerals (Development and Regulation) Act, 1957 thereby removing the restriction of end-use from the eligibility to undertake coal mining except in the case of certain specified coal blocks.

Salient features of the Bill:

204 cancelled blocks have been defined as “Schedule-I coal mines”.

• 42 producing and ready to produce coal mine out of Schedule-I coal mines are defined as ‘Schedule-II coal mines’.
• Other 32 substantially developed coal blocks out of Schedule-I coal mines are defined as ‘Schedule-III coal mines’ meant for specified end-use (more mines can be added to Schedule-III).
• The Central government has the power to classify mines identified from Schedule I coal mines as earmarked for a class of specified end-uses.
• Allocation shall be made through auction to a company or their JV.
• In case of a government company or their JV, allotment may be made without auction.
• There shall be no end-use restrictions on the eligibility to participate in the auction, other than for Schedule II & III coal mines.
• ‘Nominated Authority’ shall be appointed for conduct of auction/allotment and vesting and transfer of all interests, rights and titles of these coal mines in the successful bidder or allottee. Nominated Authority to be assisted by experts and other officers.
• The proceeds of auction shall be received by the Nominated Authority and disbursed to respective states.
• Compensation only for land and immovable mining infrastructure shall be paid to the prior allottee after paying secured creditors.
• The quantum of compensation for the mine infrastructure in relation to Schedule I coal mines is determined as per the written down value reflected in the statutorily audited balance sheet of the previous financial year.

The quantum of compensation for the land in relation to Schedule I coal mines shall be as per the registered sale deeds together with 12%. Simple interest from the date of such purchase or acquisition, till the date of the execution of the vesting order or the allotment order, as the case may be.

• “Commissioner of Payments” shall be appointed for disbursal of compensation.
• The Central government may appoint Custodian(s) for operation and management of the coal mines till they are allocated through auction or allotment.
• Tribunal constituted under the Coal Bearing Areas (Acquisition and Development), Act, 1957 will adjudicate any dispute arising out of any action of the Central government/ nominated authority or any dispute between the successful bidder or allottee and prior allottee arising out of any issue connected with the Act.