Three days after the Centre passed the Coal Mines (Special Provisions) Ordinance, 2014, a section in the Coal Ministry appears to be pushing for handing over cancelled coal blocks to Central/State government companies.

While 74 blocks were cleared for e-auction (of which 42 are operational and 32 in an advanced state of development), Section 5 of the ordinance on “allotment and allocation” gives the Centre the right to allot assets to a government company (if it is not in a joint venture with a private outfit) or to an Ultra Mega Power Project (on a competitive tariff bidding process).

A pitch note to this effect has been moved within the Coal Ministry. Sources said the Ministry is considering this route to ensure continuing coal production from some of the 74 mines, without attracting any further controversy.

Section 5 allows the allotment of blocks to State government-owned mining outfits and State-owned captive users with or without auction. However, the awardees are barred from transferring the asset to private companies.

Assessment of assets

In a parallel move, the Ministry has ordered detailed assessment of the intrinsic value of all the 74 assets and identification of a floor rate for auction, latest by November 10.

This is easier said than done, according to the sources. For, each of the mines is in different stages of production or development. Any assessment, therefore, has to be asset specific and will require both paperwork as well as physical verification.

Meanwhile, the Ministry is yet to deliberate on ways to protect the interests of the earlier allottees of these 74 assets; most have invested in end-use plants based on an allotment process that has now been struck down by the apex court as illegal or arbitrary.

The country currently produces nearly 40 million tonnes of coal through captive sources.

A substantial portion of the captive mining capacity is attributed to different Jindal outfits, including former Congress MP and industrialist Naveen Jindal’s JSPL group.

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