Govt Ordinance for e-auction of coal blocks for private companies, direct allotment to PSUs

Coal blocks

New Delhi, Oct 21: The Union Cabinet on Monday recommended promulgation of an Ordinance related to e-auction of coal blocks for private companies for captive use and allot mines directly to state and central PSUs.

According to reports, the government has decided to take this step in the backdrop of the Supreme Court directive last month to quash the allocation of 214 coal blocks to various companies since 1993.

Briefing the media about the cabinet meeting, Finance Minister Arun Jaitley said: “The Cabinet has recommended promulgation of an Ordinance to the President in order to resolve the pending issues particularly the situation arising out of the Supreme Court judgement quashing the allocation of the coal blocks.”

He said: “As far as the private sector is concerned, 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. A sufficient and adequate number of mines would be put so that actual users go back with the mines.”

The Finance Minister said the auction process would be “transparent” and completed in “three to four months” with proceeds going entirely to the state governments where the mines are located.

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

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.

He said: “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 allottee companies would be fruitfully utilised.”

He, however, vehemently denied a suggestion whether the process could be 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.”

Replying to questions on the fate of Coal India, 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.”

CIL at present accounts for over 80 per cent of the domestic production. Private companies having end-use plants like steel, cement and power used to get mines through screening committee mechanism.

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, Jaitley said only companies incorporated in India would be allowed to participate in the bidding for which the reserve floor price will be determined by a committee and the auction will be sector-specific.

Last month, the apex court had quashed allocation of 214 out of 218 coal blocks alloted to various companies since 1993, terming the method as “fatally flawed”. The court had allowed the Centre to take over operation of 42 such blocks which are functional.

(With Agency Inputs)

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