The coal ministry is taking legal recourse to ensure that the auction of coal blocks to government companies and corporations — started in December 2012 — does not get bogged down by the Supreme Court order.
Its questions to the legal affairs department are aimed at allocating blocks to state government or its public sector undertakings for captive power, steel or cement projects as well as for commercial mining, while allowing consortium of 2-3 companies in mining. The Supreme Court, in its August 25 order, ruled that Coal Mines Nationalisation Act (CMNA) permitted only the Union government and its entities to do commercial mining. “No state government or public sector undertakings of the state governments are eligible for mining coal for commercial use,” the order said.
The order also bans allocation to “any consortium / leader / association” and permits allotment only to state or central undertaking which has a unit already “engaged” in production of iron and steel or cement, power generation and washing of coal.
This cast a shadow on the ministry’s allocation of 17 coal blocks (14 for end-use power and three for mining) of which eight are allocated jointly to more than one state, for which the states have to form joint ventures or special purpose vehicles. Some states, like Bihar, have identified private firms for mining operations.
The model Coal Mine Development and Production Agreement was finalised after taking opinion of the law ministry last March, but the court order forced the coal ministry to again seek legal opinion, said a ministry official. “We are also asking law ministry to consider whether area containing coal can be made through auction to new end-use plants or expansion of end-use plants that have achieved financial closure in anticipation that they will be engaged in the business of specified end-uses,” he said.
Law ministry’s opinion is being asked on the basis of Mines and Minerals (Development & Regulation) Act which deals with all leases.
“Moreover, it is the mother Act and should be the underlying law as two-thirds of the country’s mineral comprises coal,” the official said.
While CMNA was enacted to take over mining operations from the private sector in the 1970s, MMDR Act vests the authority of giving out mining rights with states.