Even as the ordinance allowing reallocation of coal blocks cancelled by the Supreme Court received presidential approval Tuesday, the Indian industry welcomed the move saying reforms towards a transparent allocation system must provide a level-playing field for both public and private sectors.
The ordinance, unveiled on expiry of the model code of conduct in force for the recent assembly elections, has been promulgated to resolve issues arising out of the Supreme Court cancelling allocations of 214 coal blocks last month.
As per this ordinance, while state-owned organisations like NTPC and state electricity boards will be allocated blocks according to their requirements, actual users of steel, cement and power from the private sector will bid for the blocks," Finance Minister Arun Jaitley told reporters here after Monday's cabinet meeting.
Jaitley said the aim is to conduct the whole process in a fully transparent manner through e-auction, without any discretionary powers of the government in the matter.
"This is an important decision and highlights the government's seriousness to reform the coal sector. It is also necessary that the route followed must provide a level playing field for both public and private sector including on terms and pricing," Sidharth Birla, president of the Federation of Indian Chambers of Commerce and Industry (FICCI), said in a statement.
The government has also left an enabling provision in the ordinance by which it can decide on additional commercial use at a later date.
Confederation of Indian Industry (CII) director Chandrajit Banerjee said that with the announcement of the ordinance "the air of uncertainty has been resolved and clear roadmap has been put forward".
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"Power, steel and cement are critical sectors and this would help deal with the fuel supply problems that were coming up," he added.
Mining interests of state miner Coal India, present and future, will be adequately protected and the original 1973 Coal Nationalisation Act remains, Jaitley said announcing the cabinet approval of the ordinance.
Meanwhile, major trade unions representing coal workers Tuesday said they oppose the e-auction of cancelled coal blocks proposed by an ordinance with an enabling provision for commercial mining by private companies, and threatened a nationwide strike if the government went ahead with the proposal.
Saying the proposed ordinance could be used "as a backdoor entry for taking over the entire coal sector by private corporates", All India Trade Union Congress general secretary Gurudas Dasgupta said: "We strongly protest and call upon the government to reverse the decision as there is an enabling clause in the ordinance which gives rise to concerns and apprehensions of sweeping privatisation of coal sector."
If such a vital national resource was privatised, "national interest will be jeopardised and Coal India will be weakened", he added.