Order paves the way for auction of all coal mines
26 Aug 2014
The advisory group led by Prabhu, reporting to power and coal minister Piyush Goyal, has already been examining the issue.
The Supreme Court decision will open the field for auction of all coal blocks, a top-level source in the government told The Indian Express on Monday.
This would need to be accompanied by the repeal of the Coal Mines Nationalisation Act, too. The government has so far favoured continuing with the state monopoly on mining rights on coal. “What it essentially does is to open the chance for taking a comprehensive view on all the coal blocks that have been handed out to private parties over the years”, the source said.
Without getting into details, former power minister Suresh Prabhu, who is now the chief of the ‘Advisory Group for Integrated Development of Power, Coal and Renewable Energy’ in the government, said that the verdict makes it possible to allocate the blocks in a transparent manner.
Instead of the outdated method of inviting applications to mine the coal, the government can now invite bids for auction.
The auction process was started for some blocks under the UPA government in 2013, but in the light of the Supreme Court order, it will now need a legal backing. Under the Coal Mines (Nationalistion) Act of 1973, coal mining in India has to be only through the State.
The advisory group led by Prabhu, reporting to power and coal minister Piyush Goyal, has already been examining the issue.
The source said with the Supreme Court verdict, the government can now be expected to revive the Coal Mines Nationalistion (Amendment) Bill, 2000, for passage through Parliament. This will put the auctions on a sound legal footing and encourage competent players, including those from abroad, to bid for the blocks, he said.
Compared with 2000, when the legislation was brought in, there have been several changes in the sector. “Coal India was making losses then and so there was a possibility that privatisation of the sector could have pushed it into more problems”, the source explained. The Bill was eventually dropped by the NDA government, because of opposition from the lawmakers.
Since then, Coal India has become a profit-making company. Its profit in 2013-14 was Rs 15,008 crore and its cost of coal extraction from open cast mines is one of the lowest in the world, the source said. “So even if we bring in commercial mining companies from abroad to compete in the auctions, Coal India will do fine,” he added.
Source: The Indian Express