State governments are set to grant mining leases for all the coal blocks awarded during the first phase of auctions in next one month, paving the way for production to start from these operational mines, which have been lying unutilised in the absence of statutory clearances.
The move will be a big face-saver for the centre, grappling with clearances for the auctioned coal blocks, though it was swift in conducting the auction and allotment of producing and near-producing coal mines in February-March. These mines were scheduled to start production from June.
“There is no problem as far as the centre is concerned, as prior environment and forest clearances (EC/FC) were taken for all coal mines auctioned in the first phase.
The transfer of coal mines to new owners is getting delayed at the state level, but even that matter has been resolved with mining lease of at least 14 coal mines to be cleared over the next two weeks,” said a top official in the coal ministry privy to the development.
The delay from states is on the grant of mining leases, clearing boundary of mines and mutation of land, pollution certificate and state-level forestry clearances.
Of the 24 producing coal blocks (schedule-II coal blocks) that were auctioned and allotted (to public sector entities) in the first round, only about six are operational with a production capacity of 2.5 mt of coal per annum or 25 per cent of coal reserve in auctioned blocks. Two to three blocks are expected to start producing in couple of week’s time while others are still awaiting all clear from state governments.
All the producing coal blocks were operational when a Supreme Court order in August 2014 cancelled all captive coal block allocations. Even after cancellation, the earlier owners of the operational blocks were allowed to mine coal till March and pay Rs 295 per tonne as penalty.
“The delay is resulting is loss of coal production that could be used by power, steel and cement companies. But mining companies are helpless, as the new owners need to take about 19 clearances before any productive activity can start,” said an official of private sector power company that had bid for a coal block in the recent round of auctions.
According to the timeline finalised by the coal ministry, winners of coal block auctions were to secure all statutory permissions within three months of signing the vesting orders. These orders were issued to all owners of producing mines in March. Subsequently, the block owners were required to adhere to a mining plan that was to be finalised within six months of vesting orders. “There are cases of genuine delays over procedural issues. We would consider extending this deadline on a case to case basis,” said Vivek Bharadwaj, the nominated authority designated by the coal ministry for auctions.
Under the rules of auction, any delay in getting clearances on part of mine owners could result in penalties and forfeiture of performance security submitted by the winning bidders. The government is focusing on getting clearances for the 16 operational coal blocks, which have been auctioned so far, before moving to others.
Among the mines that have started production is Parsa East & Kanta Basan (this block has been allotted to Rajasthan Rajya Vidyut Utpadan Nigam), Amelia North with Jaiprakash Power Ventures, Belgaon block with Sunflag Iron and Steel, Talibara – I with GMR Chhattisgarh.
Under the first three rounds, the coal ministry has auctioned 32 blocks to private companies and garnered over Rs 2 lakh crore, surpassing CAG’s loss estimate of Rs 1.86 lakh crore in allotment of mines earlier without auction.
In addition, 38 coal blocks (both producing and near producing ones) have been allotted to central and state-run utilities.