Coal news and updates

Supreme Court cancels 214 coal blocks, spares 4

September 24: Barely a month after terming captive coal block allocations as “illegal”, the Supreme Court of India, on September 24, cancelled 214 of the 218 blocks allocated between 1993 and 2011.

The apex court, however, spared 4 coal blocks allocated to state-owned SAIL, NTPC and two ultra mega power projects (UMPP).

All the 214 cancelled blocks may be re-auctioned by the government or allotted to central firms, the court said.

For the 46 blocks which have either started production or are ready to commence production, the court gave a six months’ breathing time to wind up. The holders of these blocks, however, will have to pay a fine of Rs 295 per ton of coal mined. Captive blocks produced around 37 million tons of coal in 2013-14.

The court observed that the allocation of captive blocks by the screening committee “suffers from the vice of arbitrariness” and that "there was no transparency and it (the committee) had adopted a pick-and-choose policy".

The verdict has come as a huge blow to India's top private and government companies.

According to an estimate, the decision may impact potential investments of more than Rs 200,000 crore in key industries such as power, steel and cement. Companies that take a hit include Jindal Steel and Power, JSW, Vedanta, Essar, NTPC, SAIL and Hindalco, among others.

Earlier, the court, on August 25, termed the allocations as “illegal”, following which the government’s top lawyer, Attorney General Mukul Rohatgi, requested the court to exempt 46 producing (or nearing production) blocks from the purview of its verdict.

Also, a number of states such as Jharkhand, Odisha, Chhattisgarh and Madhya Pradesh had written to the Centre, requesting it not to consider re-allocation of coal blocks in its suggestions to the court, as it would lead to escalation in the cost of mining.