Coal news and updates

Will Supreme Court verdict impact growth?

August 26: The Supreme Court verdict on coal block allocations could turn the clock back on the economy, feel some companies which had been allocated blocks, speaking on conditions of anonymity.

“The progress of an economy depends on the growth in its mining and power sectors. Obviously, if the blocks are cancelled, then then power and steel sectors will be impacted tremendously. Where will the coal that was expected to be supplied by these captive blocks come from? This will impact the economy directly. We may see our GDP growth getting affected,” said a source.

A company which had been allotted a block and is likely to be directly impacted by the Supreme Court judgment, told ICMW: “Noting has been disclosed yet. It is still mere speculation and still too early to comment. We have not received any paper from the government yet. We were a genuine player. And so we will wait till September 1 before making any official comment…”

“These blocks had been allotted by the government of the day. And, now the judiciary is saying these were illegally allotted. The fate of sectors like mining, power, steel etc depend heavily on government policies. In such a scenario, how can a player rest assured that a government’s actions will stand? The coal block fiasco is a huge future investment deterrent,” said a Kolkata-based steel player, adding that power and steel sectors are going to be further affected due to reduced coal supplies.

On the other hand, V K Arora, President, Coal Services, Karam Chand Thapar & Bros, the single largest coal handling agency in India, feels the government will likely come to a via media to protect the interests of those players who have already invested a considerable amount of money in developing these blocks. “There could be the possibility of the government seeking a reserve price on these captive blocks from the players and allowing them to keep these, so that the genuine ones are not penalised,” he observed.

“The only positive fallout of the Supreme Court verdict is that the unscrupulous players will get penalised. But, along with this, the genuine players too will get the wrong end of the stick, said an official from a group with interests in power and steel.

On August 25, the country’s apex court declared that the process followed in allocating captive coal blocks between 1993 and 2010 by the Union government was “illegal” since it lacked transparency and proper guidelines.

The SC further said a decision on re-allocation of mines would be announced on September 1, 2014 and a decision on cancellation of blocks would be taken up on a case-by-case basis.