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Business News/ Politics / Policy/  Ordinance details bidding process for cancelled coal mines

Ordinance details bidding process for cancelled coal mines

Ordinance, which amends two important mining laws, details how government will take over coal mines allocated between 1993 and 2010

Companies whose coal mines have been taken away or cancelled can sell or lease or allow their equipment to be used by new allottees. Photo: BloombergPremium
Companies whose coal mines have been taken away or cancelled can sell or lease or allow their equipment to be used by new allottees. Photo: Bloomberg

New Delhi: The government will allow companies that had their coal block allocations for captive use cancelled last month by the Supreme Court to bid for the mines, barring entities convicted of offences related to the allotment.

The National Democratic Alliance (NDA) government spelled out the procedures it will follow for effecting reallocation of the more than 200 mines in an ordinance made public on Wednesday.

The ordinance, put up on the coal ministry’s website, details the process the central government will follow in taking over the mines that had been allocated to privately-owned and public-sector power, steel and cement companies between 1993 and 2010.

It lays down the provisions for public auction of the mines by way of competitive bidding, which will require bidders to pay a fee not exceeding 5 crore.

The Supreme Court last month cancelled the coal block allocations on grounds that they were done in an illegal manner through an “ad-hoc and casual" approach and “without application of mind".

All firms that had their coal blocks cancelled by the Supreme Court last month, barring those convicted for offences related to the allotment of mines, can bid in the e-auction after paying an additional levy, said the ordinance.

Firms running specified end-use plants like steel, cement and power, including the ones having a coal linkage, also qualify to participate in the e-auction, said the Coal Mines (Special Provisions) Ordinance 2014, which received presidential assent on Tuesday.

“A prior allottee shall be eligible to participate in the auction process subject to payment of the additional levy within such period as may be prescribed...," said the ordinance made public on Wednesday.

Any prior allottee convicted of an offence relating to coal block allocation and sentenced to imprisonment of more than three years, would not be eligible to participate in the auction, it said.

A “nominated authority" will ensure the transfer of the “rights, interest and titles" of these blocks, and the auction money will accrue to it. A central government-appointed “officer" not below the rank of joint secretary shall be the “nominated authority".

It lays down a detailed procedure for reallocation of all prospecting licences or mining leases granted both by the central and state governments.

The government has allowed successful bidders for mines or coal linkage holders having the same end-use to “enter into certain agreement or arrangements with other successful bidder or allottee or coal linkage holder" for “optimum utilization of coal mine".

The government has also allowed future allottees of captive coal blocks to enter into agreements with a “prior allottee to own or utilize" the equipment the prior allottee had acquired for the purposes of coal mining. Effectively, this will mean companies whose mines have been taken away or cancelled can sell or lease or allow their equipment to be used by new allottees.

“Earlier it used to be plant-specific allocation, now it is company-specific allocation and that, too, within the industry," said Dipesh Dipu, partner at Jenissi Management Consultants, an energy and resources-focused consulting firm.

“We can say a lot of these transportation bottlenecks can be eased because private players will obviously optimize and if it’s mutually beneficial for two parties, they would agree to swap coal linkages. And, obviously, that will ease the burden on transport," he added.

PTI contributed to this story.

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Updated: 23 Oct 2014, 12:45 AM IST
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