 "Centre to auction blocks for commercial coal mining only after ratifying ordinance")
The government is understood to be of the view that the ordinance was necessary to kickstart the process of coal block e-auction for captive mining to avoid fuel crisis in the wake of Supreme Court verdict.
"But when we are talking about opening up the coal sector for commercial mining, the aim would be to get investments from global mining majors. And for that, the government is of the view that it would be wise to get the ordinance ratified by Parliament first, as it will help to win the confidence of global miners," said an official close the development.
"To make commercial mining successful, first there needs to be zero uncertainty over government policy and, hence, getting the ordinance ratified by Parliament is necessary," added the source.
The government promulgated an ordinance paving the way for auctioning of the 204 coal blocks whose allocation was cancelled by Supreme Court in September, 2014. In the ordinance, there is also a provision for allowing commercial mining of coal by private companies.
As there is some sort of a broad agreement with coal unions as well, over the ordinance now, the government is hoping the coal bill passed in the budget session. There are also reports that the government may go for a joint session of Parliament if the government fails to get the key bills passed in Rajya Sabha, where it does not have a majority.
"Once the ordinance is ratified, the coal ministry will start the process of identification of blocks to be offered to standalone mining companies without any end-use restrictions," the official added.
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The commercial mining union Finance Minister, Arun Jaitley said, "First you give blocks to the state and central PSUs. Thereafter, you make a pool of all actual users and have an auction. Then the extra resource, while preserving the character of Coal India, without disturbing it, you then start exploring the possibility of commercial mining." He, however, did not say anything on when it would actually happen.
Auctioning of the first tranche, under which 101 blocks will be auctioned, is expected to be completed by June, 2015. After this, the balance 103 blocks will be taken up, and sources say, some of these blocks may be identified for commercial mining also.
Even though foreign direct investment of up to 100 per cent is allowed in captive mining, there has hardly been any big ticket investment. It is widely expected that global mining majors like BHP Billiton and Rio Tinto would show interest in commercial mining as end-use (as in captive mining) will not be specified and global players could grab the opportunity to sell coal in a country with a huge supply shortfall. Also, for a miner entry to India means access to the world's fifth largest coal reserves.