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MoC wondering about fate of Singareni Collieries post SC ruling

The Supreme Court's verdict citing all coal block allotments illegal has left the coal ministry wondering about fate of Singareni Collieries, now owned by the Telengana government that has been mining and selling coal since 1886 in various corporate avatars, almost a century before Coal India (CIL) was incorporated in 1975.

The judgement said that state government PSUs cannot undertake commercial coal production. Singareni Collieries is a 51:49 joint venture between Telengana government and the Centre, with annual production of 55 million tonnes,— about 10% of Coal India's output.

The judgement has not talked specifically about Singareni Collieries but stated that commercial coal mining by state PSUs is not permitted since as per the Coal Mines Nationalisation Act the state government companies were only entitled to mine small isolated pockets of coal.

"Going by this logic, even mining by Singareni Collieries is illegal. The company is yet to evaluate repercussions of the Supreme Court order on this," a source said.

The government has entrusted Singareni Collieries the task of exploring and exploiting coal deposits in the Godavari valley coalfield, which is the only repository of coal in south India. The company carries out mining in four districts of Telangana: Adilabad, Karimnagar, Khammam and Warangal. The coal ministry had allocated 38 coal blocks to state public sector undertakings for commercial mining though these companies had no specified end-use activity.

"The central government while making the allocations failed to even follow the basic statutory eligibility for grant of captive coal blocks. The power for grant of captive coal block is governed by Section 3(3)(a) of the Coal Mines Nationalisation Act. According to this, only two kinds of entities, viz., (a) Central Government, or undertakings/corporations owned by the Central Government or (b) a company having enduse plants in iron, steel, power, washing of coal or cement, can carry out coal mining operations.

The state government undertakings are not included in the above provision and any allocation to them can only be made if they are engaged in any of the end-uses specified under that provision," the judgement said.

Private coal mines were nationalized by an act of Parliament in 1973 and Coal India was set in 1975. The central government amended the Coal Mines Nationalisation Act in 1979 to allow central government undertakings to mine coal. Thereafter, it allowed state-owned PSUs to carry out mining in isolated coal areas. In 2001, the government issued a circular allowing state government PSUs to carry out commercial mining.

Source: The Economic Times