FinMin wants govt to share firms’ burden in coal block development

Says govt should make land available,help get green clearance.

Written by Priyadarshi Siddhanta | New Delhi | Published: December 11, 2013 1:30 am

In a first,the finance ministry has sought to make the government equally responsible for delays in development of coal blocks along with the allottees in case of 17 captive mines likely to be auctioned by March.

To ensure this,the ministry says efforts should be made to insert relevant provisions agreements to be signed with the winning bidders. At present,the coal ministry is finalising provisions of the coal mine development and production agreement (CMDPA).

“Provisions concerning ‘deemed approval’ may also be considered in the event the government fails to do so,” the department of economic affairs (DEA) of the finance ministry told the coal ministry in a letter on November 27.

A top coal ministry official says that of the 17 captive mines to be auctioned,six explored blocks,with an estimated reserves of 2,000 million tonnes,will be auctioned in the first phase.

The DEA says that the government’s responsibility should be to make land available and provide a ‘letter of comfort’ from the Union environment ministry. These should also be clearly enshrined in the CMDPA.

The ‘letter of comfort,essentially means that the blocks to be offered for competitive bidding would be scrutinised by the MoEF beforehand and a preliminary clearance would be indicated by it. However,the MoEF,it is learnt,is not very keen in providing such a letter and wants scrutiny of each block on its merit.

The DEA has said that a block holder should be penalised only for gross negligence and wilful misconduct in the CMDPA. To make sure the block allocatee is bound to develop the mine,it wants the firm to furnish a Performance Security,which should be calculated as a percentage of the reserve price to be fixed for the impending auctioning of blocks identified by the Central Mine Planning and Design Institute Ltd.

The DEA’s suggestions have come in the backdrop of ongoing spate of penalties and de-allocations being executed by the coal ministry at the behest of its inter-ministerial group against erring captive mine owners idling on their blocks. But in course of recent meetings with the coal ministry’s top brass,most companies have complained that their inability to develop the mines are for reasons beyond their control. In the latest round of de-allocations where allotment of 11 blocks were cancelled,the firms which lost the mines have furnished certified documents of their investments which amounted to over Rs 44,000 crore.

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