July 9, 2009 1:52:58 am
Questioning the very utility of the Coal Ministrys proposal to auction coal blocks,the mining industry today said the country should not target short-term gains by obtaining higher revenues through auction but focus on the long-term gains through early and efficient coal production. It also warned that auctioning could lead to financially strong companies cornering a majority of the blocks despite having virtually no proficiency in mining.
In a memorandum submitted to coal minister Sriprakash Jaiswal,the Federation of Indian Mineral Industries (FIMI),the apex body of miners,opposed the move to auction coal blocks for captive mining. Auctioning of coal blocks is illogical as it would drive up the cost of coal in the country unnecessarily and may render the block economically unviable,resulting in lost years before the block is forfeited. This is because of the very nature of exploration geology and methods of reserve estimation whereby the actual coal reserve may fall short of the declared tonnage despite its fullest exploration. Further,auctioning of coal blocks may lead to the coal blocks being purchased by financially strong parties,who may have little or no expertise in coal mining, a top FIMI official told The Indian Express.
The country should not target short-term gains by obtaining higher revenues through auction but should focus on the long-term gains through early and efficient production of coal resulting in creation of jobs and accrue royalties to the government over and above a reasonable allocation fee which should be fixed at a level proportionate to the size of the block and which would preclude non-serious players. This would ensure productivity,economies of scale,non-fragmentation of leaseholds (preventing loss of coal at the lease boundaries) and scientific mining with due environmental safeguards, the FIMI official said. The consuming units such as power plants,cement plants,etc may then obtain linkages from the nearest mining locations based on coal linkage allocation and pricing by the proposed Coal Regulator,he argued.
FIMI has also proposed that land acquisition be facilitated to achieve the national priority of early coal production from allocated blocks. Towards this end,FIMI has suggested amendment of the Coal Bearing Areas (Acquisition and Development) Act Section 4(1) to make its provisions applicable to all block allocatees even from the private sector or the joint sector (Public Private Partnership). As regards speeding up Statutory and Environmental Clearances,FIMI suggested an Inter-Ministerial Task Force approach to take up the matter on a war footing to radically re-engineer and simplify the current cumbersome processes which are very time consuming.
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