BackSupreme Court verdict on coal blocks will trigger reforms: S&P
The ruling could lead to an improved process for allocating coal mines and boost the supply of coal
Premium
Mumbai: The cancellation of coal block allocations by the Supreme Court is an opportunity for the government to reform the coal sector, which could play a role in determining the profitability and strategy of coal-consuming companies, Standard & Poor’s Ratings Services said in a report on Wednesday.
“The Supreme Court ruling could lead to an improved process for allocating coal mines and boost the supply of coal in a country that faces a severe shortage of the fuel," Mehul Sukkawala, credit analyst at Standard & Poor’s, was quoted as saying in the in Standard and Poor’s press release.
“We believe the cancellation of coal blocks increases near-term uncertainty for the operations and investment plans of companies that were either allocated the mines or were expecting to source coal from them… It could also hurt the significantly improved investor sentiment in India following the change in the government earlier this year," Sukkawala added.
On 24 September, the court cancelled 214 coal blocks allocated to a host of private and government companies between 1993 and 2010 as the court observed that the allocations were arbitrary, illegal, and resulted in unfair distribution of national wealth.
Standard & Poor’s said it believed a transparent allocation policy is expected and this, combined with a streamlined process for getting environmental clearances and approvals for land acquisition, would give these companies the confidence to invest and revive their long-pending projects.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
