Coal news and updates

Govt to issue Ordinance for e-auction of coal blocks

October 21: In a major move towards energy sector reforms, the Cabinet on October 20 recommended promulgation of an Ordinance to facilitate e-auction of coal blocks for private companies for captive use and alloting mines directly to state and central PSUs.

The move comes against the backdrop of the Supreme Court last month quashing allocation of 214 coal blocks to various companies since 1993.

"The Cabinet has recommended promulgation of an Ordinance to the President in order to resolve the pending issues, particularly the situation arising out of the Supreme Court judgment quashing the allocation of the coal blocks," Finance Minister Arun Jaitley said, briefing the media after the meeting.

State sector requirements, including those of the Central and state governments, would be met and coal mines would be allocated to PSUs like NTPC or state electricity boards.

"As far as the private sector is concerned, the actual users of coal in the cement, steel and power sectors who apply for a certain number of coal mines will be put in the pool and there would be an e-auction. A sufficient and adequate number of mines would be put so that actual users go back with the mines," he said.

Jaitley said the auction process would be "transparent" and completed in "three to four months" with proceeds going entirely to the state governments where the mines are located.

"The entire mess that the UPA had left behind from 2005 onwards over the next four months would be cleaned up," he said, adding coal worth $20 billion which was being imported annually would be domestically substituted through this measure.

Jaitley vehemently denied a suggestion whether the process could be termed as "de-nationalisation" of the coal sector, saying, "The original Nationalisation Act remains and will remain and Coal India Ltd will be fully protected."

Asked whether the companies whose allocations were cancelled by the apex court would be allowed to participate in the e-auction, Coal Minister Piyush Goyal who was also present at the briefing, said "Any convicted company will be debarred."

On whether the Coal Mines Nationalisation Act, 1973 would be amended to allow commercial mining, Goyal said an enabling provision for future commercial use of mines would be there as an amendment. "This is only for the future," he said.

"There will be an enabling provision for the future, where, rules framed for commercial users of mines, could also be decided by the Central government. This would lead to an optimal utilisation of the natural resource," he said. Replying to questions on the fate of Coal India, Jaitley said, "This process would not in any way impact the structure of Coal India. Coal India would continue to function as it is and all the mining requirements of CIL in the present and future will be adequately protected," the finance minister said.

On allowing foreign players in the e-auction, Jaitley said only companies incorporated in India would be allowed to participate in the bidding for which the reserve floor price will be determined by a committee and the auction will be sector-specific.

There will be no right of first refusal and all bidders will have to compete in the e-auction through reverse bidding, he said and assured that all environmental concerns will be taken care of.