Coal auction fails to push production, only 25% blocks resume output

Of the 24 producing coal blocks auctioned to private companies and allotted to state utilities, only six have commenced production, of a combined 2.5 million tonnes (mt). Two more will start production by this month, according to the coal ministry. These mines, under schedule-II of the Coal Mines (Special Provisions) Act, were operational when an August 2014 Supreme Court order cancelled their allocation. The mines were re-allocated through e-auction to private companies and allotted to state utilities. After re-allocation, these mines were scheduled to start production from June this year. The remaining 18 mines had secured the necessary clearances from the central government and were awaiting an approval from the mine-bearing states, coal ministry officials said.

According to the timeline suggested by the ministry, the coal block winners were to secure all statutory permissions within three months of the signing of vesting orders. These orders were issued to all schedule-II mine winners in March this year. Subsequently, the block owners have to adhere to a mining plan and secure an approval for their approval of their mine-closure plans within six months of the date of vesting orders.

"The central government has facilitated the vesting of land and necessary forest clearances to the coal block winners. In most cases, the final approval is yet to come from state governments," said a senior coal ministry official.

At the state level, issues pertain to mining leases, mutation of land, a second level of forest clearance to be given by the state forest department and state governments' consent to operate.

The official added to resolve the issues, the Union coal ministry would hold a discussion with state governments on August 17. The states where most mines are yet to receive all necessary clearances are Jharkhand and Chhattisgarh.

The nominated authority for the coal block re-allocation could revise the timeline for the operation of these blocks after the discussion with states. According to the agreement signed, any delay could tantamount to penalties on the performance security submitted by the coal block winner. Among the mines that have started production are Parsa East & Kanta Basan (allotted to Rajasthan Rajya Vidyut Utpadan Nigam Ltd).

Other operating mines with power generation as the end-use are two owned by Jaiprakash Associates and one each by GMR Energy and CESC Ltd. The non-power coal block won by Sunflag Iron & Steel Company is also operational, according to the coal ministry. Essar Power, which won the Tokisud North block and signed a vesting order in March this year, has said its mine would start production within a month.