Centre okays e-auction of coal blocks

New Delhi: In a bid to settle issues arising out of the Supreme Court decision to cancel 214 coal blocks allocated since 1993, the government on Monday decided to recommend the promulgation of an ordinance to facilitate e-auction of coal blocks for private firms for captive use and to allot mines directly to state and Central PSUs. This is seen as a major step towards reforming the coal sector to ensure energy security.

Finance minister Arun Jaitley told reporters on Monday that the Union Cabinet, chaired by Prime Minister Narendra Modi, had “recommended promulgation of an ordinance to resolve pending issues, particularly the situation arising out of the SC judgment quashing the allocation of coal blocks”.

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

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

Read: Coal scam: Supreme Court cancels 214 of 218 coal blocks, companies given 6 months to wind up

Mr Jaitley said the auction process will be “transparent” and completed in “three to four months”, with proceeds going entirely to states where the mines are located.

The biggest beneficiaries would be the eastern states like Jharkhand, Odisha, West Bengal and Chhattisgarh. States like Madhya Pradesh, Maharashtra and Andhra Pradesh would also benefit.

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

“This will financially empower particularly the eastern states (which have most of the coal mines) and lakhs of labourers would get employment while bank capital held up with the companies, which were allotted the blocks, would be fruitfully utilised,” Mr Jaitley said.

The minister, however, 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, Mr Goyal said an enabling provision for future commercial use of mines would be there as an amendment. “This is only for the future,” he added.

Replying to questions on the fate of Coal India, Mr 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 present and future will be adequately protected.”

The coal blocks were allocated by a screening committee mechanism. There was a political hue and cry particularly after the report of the Comptroller and Auditor General (CAG), which alleged arbitrariness and absence of any criteria on basis of which blocks were allocated, leading to the loss of Rs 1.86 lakh crore to national exchequer.

On allowing foreign players in auction, Mr Jaitley said only companies incorporated in India would be allowed to participate in the bidding for which the reserve floor price would 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 also assured that all environmental concerns would be taken care of. It is learnt that the coal ministry had drafted the Ordinance after extensive consultations with Attorney General Mukul Rohatgi.