The environment ministry’s unwavering stand of not allowing coal mining in “no-go” areas has forced the government to consider a one-time exception for companies with projects held up in these areas and exempt them from competitive bidding of coal blocks.
Further complicating the matter, there are differences of opinion within the government on whether the go and no-go classification of coal-bearing areas has any sanctity. While the environment ministry denies applications for environment clearance on the ground that no-go areas are those that possess rich forest cover, officials in the Planning Commission and the power ministry reject the validity of the categorisation, saying the blocks were allocated much before the notification.
The government has already classified the companies that were allotted coal mines before the no-go classification in two groups. Category-A companies have made significant investments in coal mining projects and are required to be given alternative blocks. Companies that have not made major progress in coal blocks have been placed in Category B.
“It is likely that they (Category-A companies) will be given blocks straightaway without the competitive bidding process. But the allocation would have to take effect from a date beforethe notification of no-go areas,” said a senior official in the Planning Commission.
He added the government might come out with a separate decision to this affect. “That must be given as a separate dispensation. It would be a specific government decision saying it has consciously decided to do this (exempting no-go companies from competitive bidding) and the Cabinet will have to take a decision on that. You cannot circumvent the law,” he said.
While a committee to look into the issue, headed by Planning Commission Member B K Chaturvedi, has recommended “appropriate preference” for companies whose projects are held up due to no-go criterion, a final decision will be taken by the Prime Minister’s Office (PMO).
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Coal block allocation in India has so far happened through the screening-committee route, where an inter-ministerial committee allocated mines to companies for notified captive use, based on an assessment of their technical and financial credentials.
In order to bring in “transparency and objectivity” in the allocation process, the government has sought to replace this process of allocation of coal mining blocks with tariff-based competitive bidding. This proposal was mooted for the first time about two years back and required an amendment in the Mines and Minerals (Development and Regulation) Act, 1957. Parliament approved the crucial amendment in the recent monsoon session of Parliament and the Bill is currently awaiting Presidential assent.
Meanwhile, the environment ministry’s no-go criterion has made it likely that the development of allotted coal mines, a majority of which is already facing time and cost overruns due to problems of land acquisition, gets further delayed.
India’s largest power generator, NTPC Ltd, is one of the many companies the mining projects of which are held up due to the no-go classification. NTPC’s Dulanga coal block in Orissa has come under the classification. “Investment and infrastructure development activities of this block are getting delayed due to indicative categorisation by the ministry as no-go area,” the company said in a written reply to an email questionnaire sent by Business Standard.
A senior official from NTPC said getting an alternative block through competitive bidding might not be preferable. “The matter should not be linked to competitive bidding. We have already planned our projects from the Dulanga coal block. Going through competitive bidding for an alternative block would complicate the issue. The new block may be far from the block,” he said.
The issue is, however, more complex, as there is no policy guideline at present, under which allocation of an alternative coal block could be considered. A case in point is the Lohara West and Lohara Extension coal block allotted earlier to Adani Power for its 3,300 Mw Tiroda power plant in Maharashtra. The environment ministry had rejected the environment clearance for the project as the mine fell in the Tadoba Andheri Tiger Reserve.
In a meeting on the issue in PMO earlier this year, the coal ministry had expressed its inability to allocate an alternative mine to the company. It said: “There is no precedent of allocating alternative blocks on any ground. The guidelines for allocation of captive blocks are silent on allocation of alternative blocks in case of any eventuality.”
“World over, this is how coal mining is done. You cannot really say that we would not do mining. How would we meet our energy requirement then?” the Planning Commission official asked.