<div>All firms which had their coal blocks cancelled by the Supreme Court, barring those convicted for offences related to mines allotment, can bid in the e-auction after paying additional levy, says the Ordinance on coal mines. The companies engaged in specified end use plants like steel, cement and power, including ones having a coal linkage, also qualify to <a href="http://www.businessworld.in/news/economy/india/india-to-open-up-coal-mines-to-private-firms-as-modi-pursues-reforms/1585335/page-1.html"><strong>participate in the e-auction</strong></a>, said the Coal Mines (Special Provisions) Ordinance 2014, which got Presidential nod on Tuesday (21 October)<br /><br />India could also allow commercial coal mining by foreign companies if they set up units in the country, opening the door for global giants like Rio Tinto to access the world's fifth largest coal reserves, a source familiar with the matter said.<br /> <br />In an executive order posted on the Coal Ministry's website on Wednesday, Prime Minister Narendra Modi's government said that any company incorporated in India may be allowed to mine coal for their own consumption or sale, overturning a 42-year-old ban.<br /> <br />As of now, only Indian power, steel and cement companies can mine coal for their own consumption. Commercial mining is dominated by state-owned Coal India Ltd.<br /> <br />But the government now plans to allow companies like Rio Tinto India to mine coal commercially after it completes the auction of 74 coalfields for the exclusive consumption of Indian companies' power, cement and steel plants, said the source. He did not want to be named as he is not authorised to talk to media. Rio Tinto India Managing Director Nik Senapati declined to comment.<br /><br /><strong>Firms With Cancelled Mines Can Bid In Auction By Paying Levy</strong><br />"A prior allottee shall be eligible to participate in the auction process subject to payment of the additional levy within such period as may be prescribed and if the prior allottee has not paid such levy, then, the prior allottee, its promoter or any of its company of such prior allottee shall not be eligible to bid either by itself or by way of a joint venture," said the Ordinance made public today.<br /><br />Any prior allottee, convicted for an offence relating to coal block allocation and sentenced with imprisonment for more than three years, would not be eligible to participate in the auction, it said.<br /><br />The long-awaited "reforms" in the coal sector, a departure from the existing practice of allocation by a screening committee mechanism, got the go-ahead from President Pranab Mukherjee, who promulgated the Ordinance cleared by the Union Cabinet.<br /> <br />The Ordinance was warranted in the backdrop of the Supreme Court's order quashing 214 coal blocks allocated to various companies since 1993 on the ground that they were done in an illegal manner by an "ad-hoc and casual" approach "without application of mind".<br /> <br />Industry bodies hailed government's move and termed it as a step in the right direction.<br /> <br /><a href="http://businessworld.in/news/economy/coal-block-allocations-since-93-done-in-illegal-manner-sc/1498494/page-1.html"><strong>Landmark SC Judgement</strong></a><br />The apex court had last month quashed the allotment of 214 coal mines to various companies since 1993 on the ground that they were done in an illegal manner by an "ad-hoc and casual" approach "without application of mind".<br /><br />It had determined additional levy of Rs 295 per metric tonne of coal extracted.<br /><br />The Ordinance was brought to allocate coal mines and "vesting of the right, title and interest in and over the land and mine infrastructure together with mining leases to successful bidders and allottees with a view to ensuring continuity in coal mining operations and production of coal, and for promoting optimum utilisation of coal resources consistent with the requirement of the country". <br /><br />The Centre will appoint an officer not below the rank of Joint Secretary as the "nominated authority" for the Ordinance, who may engage any expert to make recommendations for conducting auction and execution of the vesting order for transfer and vesting of coal mines.<br /><br />The Authority will collect proceeds of the auction which will go to the kitty of states where the mines are located.<br /><br />"The nominated authority shall, in consultation with the Central Government, determine the floor price or reserve price ... The successful bidder shall, prior to the issuance and execution of a vesting order, furnish a performance bank guarantee," the Ordinance said.<br /><br />After the issuance of a vesting order and its filing with the central government and with the appropriate authority designated by the respective state governments, the successful bidder shall be entitled to take possession of the coal mine without let or hindrance, it said.<br /><br /><strong>Getting The Process Right<br /></strong>"A successful bidder or allottee in respect of Schedule II coal mines, may negotiate with prior allottee to own or utilise such movable property used in coal mining operations on such terms and conditions as may be mutually agreed to by them," it added.<br /><br />It said the Centre may select a "Government company or corporation or a joint venture company formed by such company or corporation or between the Central Government or the State Government...any other company incorporated in India or a company or a JV company formed by two or more companies" for granting reconnaissance permit (RP), prospecting licence (PL) or mining lease (ML) through competitive bidding.<br /><br />The ML is granted for undertaking operations for extracting minerals while PL is granted for undertaking operations for purpose of exploring. RP, on the other hand is granted for preliminary prospecting of a mineral through regional, aerial and geophysical surveys.<br /><br />These companies may carry on coal mining operations in India, in any form either for own consumption, sale or for any other purpose in accordance with the permit, the Ordinance said.<br /><br />Finance Minister Arun Jaitley had said that the e-auction process will be "transparent" and completed in "three to four months" with proceeds going entirely to the state governments where the mines are located.<br /><br />The biggest beneficiaries would be the eastern states like Jharkhand, Odisha, West Bengal and Chhattisgarh. Madhya Pradesh, Maharashtra and Andhra Pradesh would also benefit.<br /><br /><strong>Unions Threaten Strike<br /></strong>But Left parties and trade unions have opposed the e-auctioning of coal blocks and the enabling provision in the Ordinance, which allows commercial mining by private firms and sought its reversal, warning of a nationwide strike if the Centre went ahead with the changes.<br /> <br />Former Prime Minister Indira Gandhi nationalised the coal industry in 1972, creating Coal India, one of the world's largest mining companies.<br /> <br />All India Trade Union Congress (AITUC) General Secretary Gurudas Dasgupta said the decision of the government on coal blocks has a "covert" implication.<br /> <br />"It is a back-door entry for taking over the entire coal sector by the private corporates," he said.<br /> <br />All India Coal Workers Federation General Secretary Jibon Roy warned of a nationwide strike if the government allowed commercial mining by private companies.<br /> <br />"To protest against the enabling provision and proposed e-auction, the workers would stage nationwide dharna on November 5 to 7," he said, demanding that the coal blocks be handed over to Coal India.<br /> </div>
