While the Union Coal Ministry has not immediately accepted most of the major recommendations of its High Power Expert Committee (HPEC) on coal auction reforms, it has expressed willingness to move forward on few minor ones such as the establishment of single-window clearance mechanism and permitting non-regulated industries to use coal in their different plants.
The HPEC, under the chairmanship of former Chief Vigilance Officer Pratyush Sinha, has recommended that only key efficiency parameters might be tracked to measure performance of the bidder that has won the mining lease. Moreover, it has suggested that penalty should be charged only when critical milestones are not completed. The coal ministry, in a proposal for the approval of the committee of secretaries (COS), has stated that this HPEC recommendation “may be accepted with slight modifications”.
Currently, total 17 milestones are tracked, and delay in achieving any of these leads to forfeiture of proportionate performance bank guarantee (PBG) indicated for that milestones. To boost ease of doing business, the Committee has recommended that “an integrated single-window clearance process for environment clearance, forest clearance, mining lease, etc., may be created”. The Coal Ministry has stated in the CoS proposal that this is a “desirable option” and “it will be an online single window system which will facilitate clearances/approvals from respective departments”.
The Coal Ministry has also expressed its willingness to accept the HPEC recommendation that “co-generation” should be permitted as one of the specific end-uses. When a plant uses both heat and electricity generated from coal, it is called co-generation. Under the Coal Mines (Special Provisions) Act, 2015, the Centre can mark certain mines for specific end-uses and auction them accordingly. The bidder who wins any such mine has to use the coal produced from it for that end-use only.
The ministry is also ready to accept the HPEC recommendation that all the end-uses in non-regulated sector — cement, iron, steel and captive power — should be classified as a “common SEU (specified end-use)” or as “same class of SEUs”, so that a bidder engaged in the steel industry can use the coal from its mine in cement industry, too. In its proposal, the ministry has stated that the HPEC recommendation may be considered in “due course after obtaining views of Ministry of Law and Justice for defining ‘same class of SEUs’ or ‘common SEUs’”.
Moreover, the ministry is willing to accept the recommendation that a ‘holding company’ of the lease owner should be allowed to utilise the coal from the mine. The holding company is the parent corporation — generally a limited liability company — which has sufficient stock to control the policies and management of its subsidiary companies.
The Indian Express reported on Thursday that last year’s indictment of former coal ministry officials by a special CBI court has cast a shadow on major reforms — including private coal mining for market sale — recommended by the HPEC.
Last July, the HPEC suggested that eligibility of bidders be decided on the basis of “adjusted tangible net worth” as well as “past mining experience expressed in terms of volume handled vis-à-vis the size of mine and/or investment required” while retaining the criteria mentioned in the 2015 coal law.
In response, the Coal Ministry was candid: “In the allocation of 204 coal mines prior to their de-allocation in 2014, the details of net worth were found inaccurate which led to registration of many cases against the officers by CBI… Verification of net worth will remain a challenge and contentious. In view of these, (we) may continue with the existing eligibility conditions for sale of coal.”