Bill set to make coal allotment transparent

Bill set to make coal allotment transparent

New Delhi: In an attempt to remove the opaqueness and irregularities surrounding the award of so-called captive coal blocks, the government has introduced a long-awaited reforms Bill in Parliament.

The Mines and Minerals (Development and Regulation) Amendment Bill, 2008 to amend the Mines and Minerals (Development and Regulation) Act, 1957, was introduced in the Rajya Sabha on 17 October.

The Bill aims to remove the subjectivity surrounding the recommendations of the screening committee on coal block allotment.

Said T.K.A. Nair, principal secretary to Prime Minister Manmohan Singh: “Awarding blocks through competitive bidding will bring transparency to the process." The Prime Minister holds additional charge of the coal ministry.

Read our 18 March story“Government plays favourites in coal mining deals"

Captive blocks are allotted to iron, steel, power and cement firms, which use the coal for their own plants.

Mint had on 18 March highlighted significant irregularities in the process adopted for allotting coal blocks to power firms. A Mint investigation disclosed significant irregularities in the government’s October 2007 award to 31 power companies of mining rights for 15 coal blocks with reserves worth around Rs5.37 trillion.

The government wants to auction blocks with reserves of 15 billion tonnes after the legislation is in place. In preparation for the auctions, the Centre is carving out 102 blocks with reserves of around 55 billion tonnes in coalfields across the country.

Of these, Coal India Ltd, the state-owned firm, will retain blocks accounting for 40 billion tonnes. The rest will be offered for captive mining.

“We have been trying for a long time for this Bill. Following its passage, the process of awarding of coal blocks will be carried out in two parts. In the first part, the players will be selected on the eligibility criteria and in the second part commercial bids will be called and on that basis, the blocks will be awarded," said H.C. Gupta, secretary, ministry of coal.

The annual award of coal blocks to government firms, as well as captive power units operated by the power sector, started in 1993. Between 1993 and 2002, rights on a total of 19 blocks were allocated.

Between 2002 and 2004, rights on an additional 25 blocks were allocated. And after the United Progressive Alliance came to power in 2004, rights on around 165 blocks have been allotted.

According to the ministry of coal, between 1993 and 6 November 2007, coal blocks for the power sector were awarded to 62 companies, including some state-owned ones.