In reform mode, govt tables bill to auction coal blocks

Any prior allottee convicted for an offence relating to coal block allocations and sentenced with imprisonment for more than three years, would be barred from participating in the auction.

By: ENS Economic Bureau | New Delhi | Published:December 11, 2014 2:11 am

Taking a step towards reforming the coal sector, the government Wednesday introduced a bill in Parliament to auction coal blocks to power, steel and cement producing companies, likely from the next month.

Tabling the Coal Mines (Special Provisions) Bill 2014, Coal Minister Piyush Goyal told the Lok Sabha that the legislation was necessitated in the wake of the Supreme Court’s September 24 decision to cancel 204 coal blocks. He added that the government moved ahead with the Bill to avert a crisis in electricity generation, save lakhs of workers from being rendered jobless and prevent thousands of crores of bank funds from turning into “stressed assets”.

Introducing the Bill had also become a necessity to replace the Coal Mines (Special Provisions) Ordinance, 2014 implemented in October to facilitate auctioning of cancelled coal mines. Passage of the legislation would pave way to bid out 74 ready-to-mine coal blocks.

Goyal refuted the contention of the TMC and Left MPs that the bill sought to de-nationalise coal mines in the country and facilitate total exploitation of the mines and their workers.

As per the Bill, any prior allottee convicted for an offence relating to coal block allocations and sentenced with imprisonment for more than three years, would be barred from participating in the auction. Also, any private company entering a joint venture with a state-run entity would be able to hold a maximum of 26 per cent stake in the firm.

The Bill envisages appointing a ‘nominated authority’ for conducting the auction process and allotment of mines with the assistance of experts, executing the vesting order for transfer and vesting cancelled coal mines. The authority will collect proceeds of the auction and pass them on to the states where the auctioned mines are located. Firms, which have lost their blocks have been allowed by the Supreme Court to bid for the mines by paying an additional levy of Rs 295 per metric tonne of coal extracted from them. Any dispute between the existing allocattees and winning bidders would be settled through a tribunal to be constituted under the Coal Bearing Areas (Acquisition and Development) Act, 1957.

While the blocks to be auctioned would have land free of any encumbrances, the clearances secured by the existing allocattees would also get passed to successful bidders. However, it is yet to be known how the bidders would be facilitated for blocks which either do not have green clearances or have expired ones.

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