One-time window to government companies to surrender non-operational coal mines

The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi approved the proposal during its meeting on Friday, the coal ministry said in a statement.

New Delhi: The government on Friday said it has approved a proposal to provide a one-time window to public sector undertakings to surrender coal mines that are not in operations without any penalty. The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi approved the proposal during its meeting on Friday, the coal ministry said in a statement.

The CCEA "has approved the Ministry of Coal's proposal for providing a one-time window to the Central and State PSUs to surrender non-operational mines without penalty (forfeiture of bank guarantee) and without citing any reason," the statement said. This may release many coal mines which the present government companies are not in a position to develop or are disinterested and could be put for sale as per the present auction policy of the government. The government companies would be given three months to surrender the coal mines from the date of publication of the approved surrender policy.

After the cancellation of coal block allocations by the Supreme Court in 2014, to avoid immediate disruption of coal supplies to thermal power plants, the government allotted many cancelled coal mines to PSUs via allotment route. The allocation route was expeditious and it was expected that the coal requirement of state gencos would be met from those blocks. The revenue share payable by state/central PSUs is fixed on per tonne basis unlike private sector who have to bid.

Given the context of allocation of coal blocks at that point of time, conditions for times lines for operationalisation of coal blocks were very stringent and firm, leaving no wriggle room either to the successful allottee or the Nominated Authority. Penalisation for delay in bringing the coal mines to operation has resulted in disputes and court cases. Till December last year, 45 out of 73 coal mines allotted to government companies, remained non-operational and due date of commencement of mining operations in case of 19 coal mines is already over.

Delays were on account of reasons beyond the control of the PSUs. Due to law and order issues, resistance of land-holders against land acquisition; geological surprises in terms of availability of coal resources among others. Coal sector is a key to energy security for the country. "In the approval, good quality coal blocks which were allotted early can be quickly recycled back after removing technical difficulties and adjusting boundaries and offered to interested parties under the recently launched commercial coal mines auction policy," the statement said. Early operationalisation of coal blocks will provide employment, boost investment, contribute to economic development of backward areas in the country, reduce litigation and promote ease of doing business leading to reduction in import of coal in the country.

PTI