Coal news and updates

Prior allottee can participate in auction, with rider

October 30: There will be no restrictions on the participation of existing captive coal block-holders in the e-auction of operational and to-be-operational blocks to be held in December-January if they clear the additional levy of Rs 295 per ton on already mined coal, according to the Coal Mines (Special Provisions) Ordinance 2014.

The Ordinance issued by the Ministry of Law and Justice on October 21 makes it clear that a prior allottee of an operational mine shall be eligible to participate in the auction process subject to payment of the additional levy within such period as may be prescribed.

If the prior allottee has not paid such a levy, then it, along with its promoter or any of the companies of the prior allottee shall not be eligible to bid either by itself or by way of a joint venture, it said.

“No allotment shall be made to a prior allottee, if it has not made the payment of the additional levy within the specified period,” it stated.

However, any prior allottee who is convicted for an offence relating to coal block allocation and sentenced with imprisonment for more than three years, shall not be eligible to participate in the auction.

The Ordinance, however, made it clear that any government company or corporation or a joint venture company formed by such company or corporation or between the central government or state government and a company or a joint venture company formed by two or more companies may participate in the auction of all other category of mines, ie, mines which are not yet operational or not likely to be operational soon.

Incidentally, the Ordinance has classified all the de-allocated mines into three categories. The first category is Schedule 1 (204 in total) ie, all the de-allocated mines, including operational and to be operational, the second category is Schedule –II (42 in total) or mines which are already operational and the third category is Schedule – III (32 in total), or mines which are likely to be operational soon.

Allotment to govt co:

The Ordinance also makes it clear that while there is provision for e-auction of Schedule – 1 coal, the central government may allot a mine to a government company or corporation which is not a joint venture with a private company or to a company which has been awarded a power project on the basis of competitive bids for tariff, including UMPPs for specified Schedule 1 coal mines by making an allotment order.

Utilisation of proceeds:

The proceeds arising out of land and mine infrastructure in relation to a Schedule I coal mine shall be disbursed maintaining the priority of payments (payment to secured creditors for any portion of the secured debt and compensation payable to the prior allottee) in accordance with such rules as may be prescribe, the Ordinance said.

Utilisation of movable property:

A successful bidder or allottee in respect of an operational mine may negotiate with the prior allottee to own or utilise such property on such terms and conditions as may be mutually agreed upon by them.

Where a successful bidder or allottee is not vested with any movable property of a Schedule I mine, then he is not bound by any liabilities or obligations arising out of such ownership or contractual rights, obligations or liabilities which shall continue to remain with the prior allottee.

Compensation for land:

The Ordinance makes it clear that the quantum of compensation for the land in relation to a Schedule I mine shall be as per the registered sale deeds lodged with the nominated authority in accordance with such rules as may be prescribed, together with 12% simple interest from the date of such purchase or acquisition.