Shortage of alternative blocks leads to more hurdles for 'no-go'

The confusion and the inter-ministerial tussle over the environment ministry’s controversial “No-Go” policy is set to deepen with the Planning Commission saying there are not enough “alternate blocks” that could be allocated to companies that have their blocks stuck in these areas.

This not only highlights further difficulties the Union Cabinet would have to face while deciding on an amicable solution to the No-Go issue in its meeting next week, but also spells out further restricting of business plans of major industrial houses.

“Where are the alternate blocks? We hardly have 25-30 blocks. And even for these, the Geological Reports (GRs) are yet to be prepared,” said a senior official from the Planning Commission, the country’s apex policy advisory body.

“For preparation of GRs, detailed exploration is done by the Central Mine Planning and Design Institute (CMPDI) to establish the reserves contained in a certain block. That has not been done so far for these blocks,” he added.

The No-Go policy, carved out for forest areas with a Gross Forest Cover (GFC) exceeding a threshold of 35 per cent, engulfs coal blocks with reserves of over 600 million tonnes in its current form. Coal blocks allotted to over two dozen companies including NTPC, Coal India, Essar Power, Rungta Mines, JSW Steel and Adani are currently falling under the No-Go zones, casting doubts over their timely development.

Under the controversial policy, the government has already classified the companies that were allotted coal mines before the no-go classification in two groups. ‘Category A’ companies have made significant investments in coal mining projects and are required to be given alternative blocks. Companies that have not made major progress in coal blocks have been placed in ‘Category B’.

At stake are investments of over Rs 40,000 crore already made by these companies in the blocks and the associated end-use projects in power, steel and cement sectors. At stake also is the government’s overall infrastructure investment target of Rs 4 lakh crore set for the next financial year.

The problem, however, does not end here. Even if India possessed enough blocks that could be given on an alternate basis, it would require amending current laws. “There is no provision in the existing policy to give alternate blocks,” the official said.

A case in point is the Lohara West and Lohara Extension coal block allotted earlier to Adani Power for its 3,300-Mw Tiroda power plant in Maharashtra. The environment ministry had rejected the environment clearance for the project, as the mine fell in the Tadoba Andheri Tiger Reserve.

In a meeting at the Prime Minister’s Office on the issue last year, the coal ministry had expressed its inability to allocate an alternative mine to the company.

It said: “There is no precedent of allocating alternative blocks on any ground. The guidelines for allocation of captive blocks are silent on allocation of alternative blocks in case of any eventuality.”

To add to the problem, even if a policy is framed for alternate allocation, experts say reaching a consensus on the methodology adopted for such an allotment would be difficult. Parliament has already passed the proposal for competitive bidding of coal blocks and companies with blocks in No-Go areas are less likely to agree for bidding for alternate blocks.

While a committee to look into the issue, headed by Planning Commission Member B K Chaturvedi, has recommended “appropriate preference” for companies whose projects are held up due to the no-go criterion, a final decision will be taken by the Union Cabinet.

The Planning Commission has already hinted at considering a one-time exception for companies with projects held up in these areas and exempt them from competitive bidding of coal blocks, as an option.

“That must be given as a separate dispensation. It would be a specific government decision saying it has consciously decided to exempt no-go companies from competitive bidding and the Cabinet will have to take a decision on that. You cannot circumvent the law,” a senior official from the commission had recently told Business Standard.