Coal Ordinance Soon to Lift SC Freeze, E-Auction Blocks

Arun Jaitley sets four-month window for completing process, says the measure would help domestically substitute coal import worth $20 bn; PSUs to get priority in allotment of mines

Published: 21st October 2014 06:00 AM  |   Last Updated: 21st October 2014 07:44 AM   |  A+A-


NEW DELHI: Less than a month after a three-judge bench of the Supreme Court cancelled the allocation of 214 coal blocks made between 1993 and 2008, the government on Monday moved an ordinance for e-auction of coal blocks for private companies for captive use and allotting  mines directly to State and Central PSUs on a priority basis.

Addressing the media after a Cabinet meeting, Finance Minister Arun Jaitley said, “The Cabinet has recommended promulgation of an ordinance to the President in order to resolve the pending issues, particularly the situation arising out of the Supreme Court judgment quashing the allocation of coal blocks.”

A Supreme Court bench, headed by Chief Justice R M Lodha, and comprising justices Madan B Lokur and Kurian Joseph, cancelled category-I coal block allocations on September 24. The court had termed the allocations “arbitrary” and said there was no basis for the same.

Jaitley said, “The entire mess that the UPA had left behind from 2005 onwards would be cleaned up over the next four months,” adding that coal worth $20 billion, which was being imported annually, would be domestically substituted through this measure.

Jaitley assured that a transparent system will now decide the allocation of mines and auction for coal mines will be carried out in the next 3-4 months. He said a sufficient number of mines will be placed in the pool for e-auction for cement, steel and power industries in the private sector, though priority will be given to public sector enterprises for coal mines.

“Coal mines will now be allocated to state-owned organisations like NTPC and other state electricity boards (SEBs) and the Eastern states and Chhattisgarh will be the biggest beneficiaries,” Jaitley said.

He pointed out that the proceeds from the auction of these mines will go directly to State governments where these mines are located.

The biggest beneficiaries, Jaitley said, would be states like Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Maharashtra and Andhra Pradesh as they will get the revenue earned from the auction directly.

“The expeditious disposal of the e-auction process will give a huge impetus to the manufacturing sector and the capital held up can be fruitfully utilised,” said Jaitley.

The Finance Minister also pointed out that the revenue earned from the e-auctions will financially empower particularly the Eastern states (which have most of the coal mines) and lakhs of labourers would get employment, while bank capital held up with the allottee companies would be fruitfully utilised.

Jaitley made it absolutely clear that the process would in no way lead to de-nationalisation of Coal India Ltd and added that, “The original Nationalisation Act remains and will remain and Coal India Ltd will be fully protected.”

Cleaning up the mess

Here’s how the government plans to usher in transparency in  the allocation of coal blocks

Sufficient mines will be placed in pool for e-auction for cement, steel and power industries; priority will be given to public sector enterprises for coal mines

A transparent process will decide on allocation of mines; process will be completed in the next 3-4 months; auction proceeds will go directly to State governments where mines are located

Biggest beneficiaries of auction of mines would be states like Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Maharashtra, Andhra Pradesh

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