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Lok Sabha passes Coal Mines Bill

The Bill will replace ordinance brought in the wake of Supreme Court order cancelling allocation of 204 blocks

BS Reporters  |  New Delhi 

Commercial coal mining in India crossed the first hurdle on Friday, with the Lok Sabha clearing changes in law to allow private companies to produce coal, after about four decades of these firms being left out of this segment. But when the Coal Mines (Special Provisions) Bill is introduced in the Rajya Sabha next week, it might face rough weather, as the ruling National Democratic Alliance (NDA) doesn’t have a majority.

Meanwhile, the coal ministry has notified the final rules for conducting e-auctions of the mines, after receiving comments from all stakeholders.

  • The Coal Mines Bill opens sector for commercial mining
  • It will also set the ball rolling for re-allocation of 204 cancelled coal blocks through a transparent e-auction process
  • In first phase, 42 producing and 32 about-to-produce mines will be put up for bidding for end use in power, steel & cement sectors
  • The bidding process has two-phases — technical & financial
  • Cap on rates will keep electricity prices in check for mines allotted to the power sector
  • Bid price and methodology of e-auction will be tabled for Cabinet approval
  • Sale of RfP will be completed by December 22-24
  • Govt hopes to conclude e-auction process by March 11

Opposition politicians disclose they will ensure the Bill, which also provides for the fresh auction of 204 coal blocks, is examined clause-by-clause by a select committee of the Rajya Sabha.

The Congress has issued a diktat to its members in the Rajya Sabha to ensure they are present in the House next week, owing to the legislative business on the agenda. “The party is clear this Bill should not be served on a platter to the Bharatiya Janata Party (BJP)-led government the way the insurance Bill was. There is a practice in the Upper House to pre-examine all Bills that are substantial in nature, before these are debated,” said a Congress leader.

Opposition parties account for about 100 members in the Rajya Sabha, against 59 of the NDA. Opposition to the Bill in its current form will surpass the half-way mark of 122 if Janata Parivar parties, with 30 members, also demand the Bill be referred to a select committee.

In the Lok Sabha, the Congress, the Trinamool Congress, the Biju Janata Dal and the Left parties demanded the Bill be referred to a standing committee. However, it was passed by voice vote.

While maintaining the Bill would not denationalise the coal sector, Coal Minister Piyush Goyal claimed the amendments would ensure transparency. He said his government was trying to repair the damage caused under the United Progressive Alliance government, when coal blocks were “given free”.

Besides, the government would ensure power rates didn’t increase, he added. “The power sector is a regulated one. Reverse bidding auction will happen...Prices will fall.”

The government could, however, face problems from Coal India workers, at a time when it asking the company to meet a one-billion-tonne annual production target in five years. A Left party-supported trade union has decided to go on strike on January 13.

“The government has exploited the Supreme Court’s verdict to denationalise coal. We have already launched protest demonstrations against this,” said Jibon Roy, general secretary of the Centre of Indian Trade Unions-led All-India Coal Workers Federation. Three other unions --- the Congress-backed Indian National Mine Workers Federation, the Hind Khadan Mazdoor Federation and the coal workers’ union of the Bharatiya Mazdoor Sangh, are yet to clarify their stand on the matter.

Opening the discussion on the Bill on Friday, Congress MP Jyotiraditya Scindia faulted the proposed legislation on several counts. He said the proposed amendments weren’t required to auction the 74 coal blocks under schedule-II and schedule-III.

The changes proposed are removal of the end-user requirement and allowing the central and state governments to form joint ventures and get the blocks allotted. “Now, both were the reasons for which the Supreme Court cancelled the allotment of the blocks. It makes a mockery of the Supreme Court order. In effect, this Bill seeks not only to auction these coal mines, but also to amend the Coal Mines (Nationalisation) Amendment Act, 1976, and the MMDR Act, 1957, without a full-fledged debate on the floor of this House.”

He said if the government intended to auction the 74 blocks, it didn’t need the amendments in the two Acts. “Therefore, I would urge this government if you are thinking of privatisation of the coal area and want to create commercial gains and private profiteering in this sector, that will not be in national interest in the long term.” He added the government was wasting an opportunity to recast the sector.

On September 24, the Supreme Court had said the allotment of coal blocks between 1993 and 2010 was illegal, which forced the government to bring in an ordinance in October. The Bill replaces the ordinance and seeks to allow commercial mining in the country, apart from re-allocating the 72 cancelled operational coal mines for end-usage to the power, steel and cement sectors by February next year.

Enabling provisions for commercial mining are being added in the Coal Mines (Nationalisation), or CMN, Act, 1973, and the Mines and Minerals (Development and Regulation) Act, 1957. Section 3A is being inserted in the CMN Act to enable joint ventures to be formed by the central and state governments and their companies with any company for mining operations in India “in any form, either for own consumption, sale or any other purpose”, in accordance with the licence granted by the state government.

All companies can bid for the 132 mines under schedule-I, which are yet to be explored. Bidding for mines in the second and third categories (mines already producing and about to begin production, respectively) will be open to companies engaged in specified end-uses of the power, cement and steel sectors.

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First Published: Sat, December 13 2014. 00:57 IST