After amending the modalities involved in coal mine allocation under The Mineral Law Bill 2020, the ministry has enlisted certain rules to be implemented under the Coal Mines (Special Provision) Rule 2014.
The amendment brought to overcome the short-comes of the previous version, has been drafted under the Coal Mines (Special Provision) Amendment Rules 2020.
Apart from defining certain phrases related to mines and auctions, Coal Ministry has introduced the following rules under the amendment which has been enumerated below:
1. Purpose of allocation: Under the sub-rule (2) of rule (8), the ministry has specified that purpose of allocation of coal mines including, but not limited to, own consumption of coal, or sale of coal.
It is pertinent to note that own consumption may include consumption of coal in any specified end use or in any combination of specified end use.
In addition, it was highlighted under the rule that the sale of coal mine could take place either in the form of forward or reverse auctions.
2. Defining the prices associated in auctions: Under the sub-rule (3) of rule (10), the amendment included the floor price in forward auction or ceiling price in case of reverse auction, in addition to the eligibility conditions, process of conduct and other related information.
It was also informed that the financial bid may be divided into sub-stages or rounds as deemed expedited by the government.
3. Assessing the coal quantity to be procured by a successful bidder having coal linkage:
The adhering rule was inserted under sub rule (4) of rule (10), which states that
(a) In case, any company has acquired coal mine via auction before the commencement of the Coal Mines (Special Provisions) Amendment Rules, 2020, then the entitlement of such bidder to receive coal via linkage would be reduced on the basis of the requirement being met from the mine.
(b) Whereas, if the company has acquired the mine after the implementation of the rule, then the quantity supplied via linkage would be reduced as specified by the nominated authority in the tender document.
When the coal mine is auctioned for the specific purpose of own consumption, then the capacity of the end use project would be in proportion to the capacity of coal block as may be specified in the tender document.
4. Rules framed for allotment of mines:
The sub rule (2) under rule (11) of the amended document allows a limit based on any parameter regarding production or any combination to allocate mines not only specific to a company or corporation, but also for its subsidiaries/holding/group companies and affiliates.
Sub-rule (4) of the underlying principle rule provided the provision for mines whose mining plan has not been prepared. In that case, the nominated authority may specify the price after allotment of block and preparation of mining plan. While, the successful bidder would have to furnish an undertaking as a part of agreement and pay the amount within the specified time.
Besides, sub-rule (8) entitles the nominated authority to declare the preferred allottee on the basis of allotment result, instead of directly forwarding its recommendation to the government which was the case earlier.
5. Increasing the relaxation norms for allotment of Schedule I mines:
In the earlier version of Coal Mines (Special Provision) Rule, the allotment of a Schedule I coal mine was confined to a central government company or corporation.
However, under the amended document it has been expanded to
(i) a government company or corporation owned, managed or controlled by the central government, or
(ii) a government company or corporation for utilization of coal in the linked power project to be awarded on the basis of competitive bid for tariff (including ultra mega power project).
6. Agreement with the successful bidder:
The following rules were added under principle rule (13) which specify agreement of the nominated authority with the successful bidder.
(i) The initial terms and conditions of the agreement should comprise all the conditions including the mining lease for the coal block, which the state/central government deem fit under the mineral concession rules before granting the mine opening permission.
(ii) Thereafter, the successful allocatee should provide an unconditional and irrevocable performance bank guarantee in favour of the state government for the amount equivalent to the performance bank guarantee submitted by it to the central government for ensuring the production of coal as per the mining plan.
7. Re-auction and Re-allotment: Rule (17) of the amended document entitles the nominated authority to re-initiate auction or allotment of Schedule-I mine, which is not allocated or its vesting/allotment order has been terminated, subjected to order from the government.
8. Conditions and Liabilities:
Earlier, the bidder was granted approval regarding coal mine or coal linkage, after filing an application to the government. Thereafter, the same had to enter into an agreement or arrangement with the nominated authority.
But, the amended document under the sub rule (4) of principle rule (19) has specified that the government may impose any condition which shall be binding on the parties to such agreement or arrangement.
Upon execution of such agreement or arrangement, the party carrying out the mining operations in the coal mine or receiving coal under coal linkage shall bear the liabilities in relation to such coal mine or linkage.
A new regulation drafted underneath this principle rule exempt the allottee whom coal mine has been awarded for utilization in linked power projects on the basis of competitive bid for tariff from entering such agreement and arrangements.
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