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OCT 07 2014

SC coal block verdict: NDA may bring ordinance to settle legal issues

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 07th OCT 2014

The government may bring in an ordinance to sort out the legal mess arising from the Supreme Court's recent judgement that cancelled all but four of the captive coalfields allocated since 1993.

"There are many things in the offing; nothing is final. Ordinance is one option," said a government official, who did not want to be identified. This person declined to comment on the other options he said were under consideration.

Separately, the Press Trust of India (PTI) reported on Monday that the government had sought an opinion from attorney general Mukul Rohatgi on whether it needs to bring an ordinance.

On 25 August, the apex court had ruled that all the coal mines allocated since 1993 had been given away illegally. Following this, on 24 September, it cancelled the allocation of 214 out of 218 blocks.

The same day, Mint reported that the government could consider bringing in an ordinance in this matter.

The blocks are currently in possession of private and government-owned power, steel and cement companies, and would have to be taken over by Coal India Ltd, before they can be auctioned. The apex court has allowed till the end of March next year for this process to be completed.

There are mainly three legal issues that need to be settled, according to Dipesh Dipu, an energy analyst and partner at Jenissi Management Consultants.

"Even if you take a company's mining rights away, there is still the issue of surface rights, or the land that they have. The companies would have to be compensated," he said.

The second issue is that of assets owned by companies that have been operating the blocks. "The process for what happens to assets and equipment needs to be specified. Assets are both movable and immovable," he said. "The option before the government is to nationalize the assets and then auction the same."

"The third important issue is that of returning the money in cases where bank guarantees had been encashed by the government," Dipu said.

To be sure, 46 of the 218 allocated coal mines had either begun production or were close to doing so. Out of these, all but four allocations were cancelled by the apex court. As part of the ruling, the firms operating the mines will have to pay a fine of Rs.295 for every tonne of coal extracted.

Till June this year, the government had deallocated 80 coal blocks and had forfeited bank guarantees in 42 cases.

Coalfield allocations came under the scanner in August 2012 when the Comptroller and Auditor General of India submitted a report in Parliament alleging a notional loss of Rs.1.86 trillion due to wrongful allotments.

It also alleged that the blocks were awarded in an opaque manner. Following this, the Central Bureau of Investigation began probing the matter under the supervision of the Supreme Court.


Captive Comptroller and Auditor General Coal Energy Coal Mines Power India CAPTIVE

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