Coal Mines Bill passed by Rajya Sabha

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SME Times News Bureau | 21 Mar, 2015
With the coal ordinance permitting auction of cancelled blocks due to lapse on April 5, the Rajya Sabha on Friday passed the Coal Mines (Special Provisions) Bill, 2014, in the nick of time before parliament goes into its scheduled month-long recess.

Failure to pass the bill, already cleared by the Lok Sabha, would have put into jeopardy the status of mines already auctioned, which has yielded revenue of more than Rs.200,000 crore from winning bids.

The bill, providing for allocation of coal mines and vests the right, title and interest over mine infrastructure together with mining leases to successful bidders through a transparent bidding process, will now replace the ordinance outlining the procedure for auction of coal blocks that were cancelled by the Supreme Court in September.

It also provides for allotment of blocks to public sector undertakings.

As per rules, the auctions are being conducted under tariff based reverse bidding where the end-use is power generation, and forward bidding for production of steel, cement and generation of power for captive use.

While the criteria for calculating the floor price for bidding is based on state miner Coal India's (CIL) price of coal of the same grade, the auction also has a ceiling price for power sector bidders to keep the lid on power tariffs.

Speaking to reporters after passage of the legislation, Coal and Power Minister Piyush Goyal described as a "historic" shift in paradigm in the transparent allocation of natural resources in India.

"Never in the future will any government be able to exercise discretionary authority in the allocation of the country's natural resources," he said.

Earlier, replying to the debate, Goyal told the Rajya Sabha that the bill seeks to "balance the revenue interests of the coal-bearing states with those of power consumers in all the states".

Commenting on the passage of bills on mines and minerals and coal by the Rajya Sabha, Jyotsna Suri, president of industry chamber FICCI, said the "new legislations will herald a new regime of competition, efficiency, and transparency for key natural resources by fostering fair play through market forces".

It is a strong boost to the confidence of investors, who have been looking for clarity and certainty in the policy regime, she said in a statement.

In two rounds of auctions, the central government has already auctioned 33 blocks garnering revenue of over Rs.210,000 crore.

In a meeting earlier this month, Coal Secretary Anil Swarup has told successful bidders that they will get all possible central and state approvals along with the vesting order, to be issued by March 23, so that coal prospecting can restart from April 1.

The vesting order transfers to the successful bidder all the rights, title and interest of the prior allottee and a mining lease that will be granted by the state government.

Among the statutory licences and clearances required to start coal mining are ministry of environment and forest approvals, consent from the local pollution control board, mines safety clearances and an escrow account for dealing with early exit from operations.