No-Go deadlock delays coal block auction

Six months after Parliament approved the crucial amendment to the Mines and Minerals (Development and Regulation) Act, 1957, for competitive bidding of coal blocks, an inter-ministerial committee is still struggling to finalise the guidelines for the bidding regime. The environment ministry’s controversial ‘No-Go’ policy has made auctioning difficult.

“Competitive bidding is getting delayed due to the No-Go issue. While around 50 blocks have already been identified for auction, we do not yet know how many of them are falling in the No-Go areas or how many are to be freed and in how much time. After all, no block can be put up for bidding until the policy on No-Go becomes clear,” said a senior official close to the development.

The proposal of auctioning coal blocks through competitive bidding was mooted for the first time over two years ago. Parliament approved amending the MMDR Act in the monsoon session in August last year. “At least three meetings of the inter-ministerial committee, headed by the coal secretary, have already taken place since then to frame the basic guidelines on bidding. But no decision has been taken so far,” the official said.

Competitive bidding will replace the current practice of allocating blocks to the private sector for notified captive use based on recommendations of an inter-ministerial committee. The new system is expected to induce “transparency and objectivity” in the overall coal block allocation process.

The No-Go policy was carved out by the environment ministry over a year before for areas with a gross forest cover exceeding a threshold of 35 per cent. The policy, in its current indicative form, engulfs coal blocks with reserves of over 600 million tonnes. Blocks allotted to over two dozen companies including NTPC, Coal India, Essar Power, Rungta Mines and Adani are currently falling in No-Go zones, casting doubts over their timely development.

The issue had sparked an environment-versus-development debate and an intense inter-ministerial tussle, with ministers of power, coal and steel on one side and Environment Minister Jairam Ramesh on the other. The situation later forced Prime Minister Manmohan Singh to intervene and he suggested a softening of stand for Ramesh.

A 12-member Group of Ministers (GoM) headed by the finance minister and having representation of over a third of the PM’s cabinet was also set up to resolve the matter. While the first meeting of the GoM on February remained inconclusive, Ramesh would make a case for the No-Go policy through a presentation in the next meeting, expected to be convened this week.