Old coal block allottees can bid afresh, but with a rider

The Centre's ordinance on e-auction of coal blocks allows the companies that had bagged the mines under earlier discretionary allocation system to bid afresh, but with a rider. These companies shall only be able to bid for the mine if the additional levy of Rs295 a tonne imposed by the Supreme Court has been paid.

Supreme Court decision that cancelled all 214 blocks allotted since 1993 also said the firms that have extracted coal must pay Rs295/tonne for the entire quantity mined. According to the ordinance, the prior allottees will have to pay the penalty within the stimulated time. On failing to do so, not only the company mine but the promoter and any other entity formed by him or a related firm shall not be able to bid, either alone or through a joint venture. Any of the prior allottees convicted in a coal block related case have also been barred from bidding, says the ordinance.

Local businessmen said, on the face of it the Supreme Court meant only companies that have mined the coal have to pay the penalty. "So there will be no bar on bidding by the prior allottees that had not started the mine. These firms may have an edge over others," said a director in one of the local firms allotted the mine and is now subject to penalty.

Five city-based companies figure in the list of firms that had started mining. These are - Jayaswals Neco, Sunflag Iron and Steel, Sarda Energy, Shri Virangana Iron and Steel as well as B S Ispat. Among the pack, Neco had the highest number of mines allotted. There are 40 coal blocks that have been made operational.

There are also firms allotted the mines but did not start production. For example, Adani Power was allotted a mine in Chandrapur but it was deallocated as it was close to Tadoba tiger reserve. In Nagpur, promoters of some companies sold the entire stake to different companies for a premium after they secured mines in their firm's names. One of the company that purchased mine from such promoters has ended up being liable to pay the penalty as it had started mining coal.

Any government company which did not form a joint venture with a private party shall be allotted a mine if it has been allotted a power project on the basis of competitive bidding for the tariff, the ordinance says.

Source: The Times of India