In an important step toward energy reform movement, the Council of Ministers on Monday recommended the enactment of an Ordinance to facilitate e-auction of coal blocks to private companies for captive use and allocate directly to the state mines and power supplies Central.
"The Cabinet has recommended the adoption of an Ordinance to the President in order to resolve the outstanding issues including the situation arising from the judgment of the Supreme Court to annul the allocation of coal blocks," Finance Minister Arun Jaitley said informing the media after the meeting.
Requirements of the State sector, including the central and state governments met and coal mines allocated to PSUs like NTPC and state electricity boards.
"In regard to the private sector, real carbon users in the fields of cement, steel and energy that apply to a number of coal mines will be placed in the pool and not have an e-auction. A sufficient and adequate number of mines were put to actual users back to the mines, "he said.
Jaitley said that the auction process will be "transparent" and ending in "three or four months," whose proceeds will go entirely to the governments of the states where the mines are.
"All the mess that the UPA had left from 2005 over the next four months was cleaned," he said, adding coal worth USD 20 billion being imported annually would be replaced in the country by this measure.
The biggest beneficiaries would be the eastern states like Jharkhand, Odisha, West Bengal and Chhattisgarh. States like Madhya Pradesh, Maharashtra and Andhra Pradesh would also benefit.
"This will economically empower especially the eastern states (which have most of the coal mines) and hundreds of thousands of workers to get a job while bank capital celebrated the successful bidder companies would use," said Finance Minister.
Jaitley vehemently denied a suggestion if the process could be termed as "denationalization" of the coal industry, saying: ". The original Nationalization Act, remains and will remain and Coal India Ltd will be fully protected"
Asked whether the companies whose assignments were canceled by the apex court is allowed to participate in the management of the auction, the Minister Coal Piyush Goyal who was also present at the briefing, said: "Any offending company will be excluded. "As to whether the Coal Mines Act 1973 Nationalization was amended to allow commercial mining, Goyal said an enabling provision for future commercial mining would be there as an amendment. "This is for the future," he said. "It will be a positive for the future in which, under the rules framed commercial users of the mines could also be decided by the central government provision. This would lead to optimal utilization of natural resources."
In response to questions about the fate of Coal India, Jaitley said, "This process would in no way affect the structure of Coal India. Coal India would continue to operate as it is and all mining requirements CIL in the present and the future will be adequately protected. "
CIL currently represents over 80 percent of national production. Private companies have end-use plants such as steel, cement and energy used for mining mechanism through selection committee. The coal blocks are allocated through a mechanism of selection committee. There was a political hue and mourn especially after the report of the Comptroller and Auditor General (CAG) alleging arbitrariness and lack of criteria on which blocks are allocated, leading to loss of Rs. 1.86 million lakh rupees to the national exchequer. "The matter was brought to the Supreme Court through a public interest litigation. The SC quashed the entire allocation. The government had asked the SC to issue should be decided quickly because the electricity industry, cement and steel would suffer. "
Jaitley said the land transfer is automatic and the landowner would be compensated. In allowing foreign players in the auction, Jaitley said only companies incorporated in India would be allowed to participate in the tender for the minimum reserve price will be determined by a committee and the auction will be specific to the sector. There will be no right of first refusal and all bidders will have to compete in the electronic reverse auction through bidding. He also assured that all environmental concerns are addressed.
The apex court had last month quashed the allocation of 214 out of 218 coal blocks allotted to various companies since 1993, calling the method as "fatally flawed." He had allowed the Centre to take over the operation of 42 such blocks are functional. The Coal Ministry has drafted the ordinance after extensive consultation with the Attorney General Mukul Rohatgi.
The issues that must be resolved by the government in the case of coal mines include forfeiture of bank guarantees and title deeds of land mines purchased by businesses, the source said.
Successful bidders at the auction block fresh coal, together with the position of the earth and the plant would be responsible for paying the cost previous winner of the earth and the plant with an annual interest of 12% in amount originally invested for the purchase of land and the establishment of the plant, the source added.
