Union Cabinet approved bill on coal block auctions to replace Coal Mines Ordinance 2014

The Union Cabinet on 2 December 2014 approved a bill on coal block auctions to replace the Coal Mines (Special Provisions) Ordinance, 2014. The decision on the bill was taken at a cabinet meeting chaired by the Prime Minister Narendra Modi. The Bill is expected to be introduced in Parliament in the winter session 2014.

The Ordinance was promulgated by the President in accordance with the Article 123 (1) of the Constitution to allow Union government to acquire the land of the 214 cancelled coal blocks and plants on it and e-auction them.

It also seeks to amend the Coal Mines (Nationalisation) Act, 1973 to effectively open up the coal mining sector to all companies in India including subsidiaries of foreign entities.

Main highlights of the Coal Mines (Special Provisions) Ordinance, 2014
• It details the process the Union government will follow in taking over the mines that had been allocated to privately-owned and public-sector power, steel and cement companies between 1993 and 2010.
• It allows companies that had their coal block allocations for captive use cancelled by the Supreme Court to bid for the mines. However, it barred entities convicted of offences related to the allotment.
• It lays down the provisions for public auction of the mines by way of competitive bidding, which will require bidders to pay a fee not exceeding 5 crore rupees.
• It also allows a prior allottee to participate in the auction process subject to payment of the additional levy within such period as may be prescribed
• Any prior allottee who is convicted for an offence relating to coal block allocation and sentenced with imprisonment for more than three years, shall not be eligible to participate in the auction
• It classifies mines and their assets in three schedules.
• The first schedule contains all mines de-allocated by the Supreme Court on 24 September 2014, the coal bearing land acquired by previous allottees of these mines and the mining infrastructure.
• The second schedule comprises 42 mines mentioned in the first one but which are producing coal and for which the apex court has allowed a six-month grace period.
• The third schedule coal mines comprises of 32 Schedule I coal mines listed in Schedule III or any other Schedule I coal mine identified by the Union government for the purposes of specified end use.
• It provides for a nominated authority to ensure the transfer of the rights, interest and titles of these blocks, and the auction money will accrue to it. A Union government-appointed officer not below the rank of joint secretary shall be the nominated authority.
• It lays down a detailed procedure for reallocation of all prospecting licences or mining leases granted both by the central and state governments.

Background
Supreme Court in its order of 24 September 2014 had cancelled 214 coal block mines out of 218 allotted since 1993 saying they were given in an illegal and arbitrary manner.

After decision of Supreme Court, the Union Government through an Ordinance started the process of auctioning at least 74 operational or ready-to-operate blocks and has set a deadline to auction them by March 2014, the deadline set by the court for companies operating the mines to wind up operations.