Govt to amend law for giving coal block auction fund to states

Govt to amend law for giving coal block auction fund to states


New Delhi: The Mines Ministry will soon seek the Union Cabinet’s approval to amend a law for transferring the entire resources raised by auctioning of coal blocks through competitive bidding to the resource-bearing states.

“Following approval of a proposal by a Group of Ministers (GoM), the government will introduce an amendment in the Minerals and Metals (Development and Regulation) Act, 1957, as per which resources raised through auctioning of coal blocks through competitive bidding are transferred to the resource-bearing states," a senior Mines Ministry official told PTI.

He said the GoM, headed by Home Minister Shivraj Patil and constituted on 22 February this year, had approved the proposal after extensive deliberations. The final proposal suggests adding a sub-section in the Act to introduce auction as a selection process for allocation of captive blocks.

“Earlier, the Ministry of Power and the governments of Rajasthan, West Bengal and Chhattisgarh had serious reservations on introduction of the competitive bidding process, which had necessitated the constitution of the GoM," he said.

The Coal Ministry had favoured introduction of competitive bidding as a measure for ensuring fairness in allocation of coal blocks to stakeholders, he said.

Competitive bidding would involve payment of either lump sum amount or percentage share of production to the government. The Coal Ministry was in favour of the lump sum amount system wherein the bidder indicating the highest value would be declared successful, the official said.

Most of the coal mines, except those with iron and steel companies, were nationalized in 1972-73. Subsequently, with amendments in the Act, power and cement companies were also allowed to carry on coal mining for their captive use.

In 1977, the Coal Ministry decided to allow mining without the restriction of captive mining. However, an amendment to this effect is still pending in the Rajya Sabha, for want of a political consensus, the official said.

A total of 172 blocks with reserves of 38 billion tonnes have so far been alloted for captive and commercial mining outside the domain of Coal India Ltd and Singareni Collieries Company Ltd. A production base of over 800 MT of coal a year from captive mines has already been created.