No private rights on coal in blocks allotted to states

Under a new commercial mining plan, Centre likely to offer 6 blocks to state governments

State governments allotted coal blocks will not be allowed to issue equity or coal-selling rights to private parties.

Under a new commercial mining plan approved by the Cabinet last week, the Centre is likely to offer six coal blocks to state governments. The restriction will ensure mining development operators do not own the mines in the garb of contractors, said an official. The coal ministry is designing a format for states to apply for coal blocks as well as a suggested mechanism for sale of coal by the states and their public undertakings. It would also design a suggestive transparent mechanism for sale of coal by states and their public sector undertakings. It, however, would not be mandatory.

States can customise the mechanism depending on their coal demand. Blocks allotted to states earlier this year did not allow sale of coal outside the specified end-use.

Till 2013, most blocks allotted to states had undergone changes in their equity structure, making private miners their owners. The Supreme Court last year struck down this arrangement and cancelled all coal block allocations to states.

"States will be allowed to engage mining development operators through a transparent process but only as contractors. The Centre will make sure no joint ventures with mining development operators or change of ownership happens," said an official in the coal ministry.

Jharkhand, Chhattisgarh, Odisha, Madhya Pradesh, Goa and West Bengal are likely to apply for blocks. The ministry is hoping the new method of allocation will curb blackmarketing of coal.

"We will only monitor ownership of the blocks. The Centre will suggest a transparent mechanism for marketing and selling coal but it is up to the states to decide who they want to sell to. The states will also decide the criteria for commercial mining and we will check if they adhere to these," said the official.

The blocks to be allotted to states would be selected from the set remaining in Schedule-I of the Coal Mines Special Provisions Act, 2015, the official added.

RUNNING A TIGHT SHIP

• Jharkhand, Chhattisgarh, Odisha, Madhya Pradesh, Goa, and West Bengal might take up commercial coal mining and sale
   
• Centre to design guiding mechanism for sale of coal, states free to sell to anyone
   
• Ownership of blocks to be strictly monitored, MDOs to work just as contractors and not own any equity
   
• Sale and marketing of coal at state's discretion
   
• Centre hopeful of curbing black-marketing, make available cheap coal to small industries
   
• Six blocks from Schedule-I identified, more to follow according to the applications by states