Post cancellation of coal blocks, the central government has taken a vital decision with an ordinance to allow private players for commercial coal mining.
The central government is planning to start e-auction of 214 coal blocks, which were cancelled by the Supreme Court on 24 Sep, 2014, in upcoming 3-4 months. The government is likely to acquire the allocated lands from the mine owners. However, the SC’s decision is silent on this aspect. To resolve this, the coal ministry has decided to issue an ordinance, vesting land along with coal mines back to the Centre.
- The actual users of coal in the cement, steel and power sectors, who apply for a certain number of coal mines, will be put in the pool and there would be an e-auction
- Coal mines would be allocated to PSUs like NTPC or state electricity boards with auction
- The entire process of re-allocation would be completed within 3-4 months – Finance Minister
- The revenue of the auctions would go entirely to the state governments, where the mines are located
The central government has decided that the overall auctioning process will be handle by the state government including Jharkhand, West Bengal, Odisha and Chhattisgarh. In this process, some specific sectors such as power, steel & cement can participate for competitive bidding of 214 coal blocks. Also, in the first round, only end-users are eligible to participate.
A quick clearance of the process expected to provide a big relief to the manufacturing sectors of the country as well as it will also support banks, whose funds are stuck in non-performing sectors post the SC’s verdict. Also, coal imports in the country are expected to reduce, which was 180 MnT in FY14.
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