Coal blocks revert

Government to take back mines allocated to companies

By Ruhi Kandhari
Last Updated: Saturday 04 July 2015

the ministry of coal has decided to de-allocate coal blocks that were handed over to power generation, cement and steel companies to meet their own requirement for coal, said a senior government official. Many of these companies have not started work on mines for captive consumption even after a decade, the official added. The ministry therefore wants to weed out non-serious holders of captive coal mines, the official said. The public sector National Thermal Power Corporation, Binani Cement, steelmakers Jindal Steel and Power Limited and ArcelorMittal are some of the companies that are likely to lose their allocated coal blocks.

In June this year the ministry reviewed the progress of captive coal mines. It found, of the 196 captive coal blocks allotted since 1993, only 25 had been developed. Captive mines are awarded to companies with a condition to start production in 36-54 months.

The coal ministry started sending showcause notices to defaulting mine holders after the June meeting as there was no serious effort to develop the coal blocks. The ministry is in the process of identifying non-serious mine holders, the government official said. He added that companies were provided the blocks for free to relieve them of the pressure of developing a mine.

The government is now mulling competitive bidding for grant of captive coal blocks. If Parliament passes the proposed law on competitive bidding, companies seeking captive coal blocks will have to pay to get coal blocks, which will go to the highest bidder, the coal ministry official said. The ministry can use the competitive route to pass on the de-allocated captive blocks to the industry after weeding out the non-serious players, he added.

Some industry players blame government procedure and the clearances required from the ministry of environment and forests, state governments and the ministry of mining, Puneet Goel of kpmg Advisory Services said. Some of the coal block allottees are possibly waiting for the government to allow free merchant trading as an amendment to the coal nationalization act is pending in Parliament, Goel added. At present coal from mines is allotted exclusively for a project and the coal cannot be traded.

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