The Telegraph
Tuesday , January 14 , 2014
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Rules to decide coal course

New Delhi, Jan. 13: Coal and power ministries today said that blocks with environment approval and forest cover (stage-I) clearance should not be de-allocated; rather, blocks that have shown no progress should be taken back and auctioned.

The cabinet committee on economic affairs met here today to discuss the possible de-allocation of coal blocks awarded to industrial houses for their steel, power or cement plants.

Coal minister Sriprakash Jaiswal could not attend the meeting. However, the coal secretary and power ministry officials strongly argued against any an en-masse cancellation of coal blocks as this would imply the allocation process itself was wrong. Besides, it could lead to a breach of contract with the affected industrial houses, which might have environment clearances.

The law ministry, however, favours the Supreme Court’s suggestions to cancel all blocks given after 2005, said sources.

A note prepared for the meeting said a review for de-allocation, spurred by the Supreme Court’s comments, would look at some 61 coal blocks allocated to private players — 29 given before 2005 and 32 allocated after 2005.

The broad principles will be “where the blocks obtained environmental clearance and forest clearance (stage-I) will not be considered for de-allocation” and the companies will get four weeks to submit documents.

However, blocks that have not seen much progress in terms of detailed exploration or obtained any clearances will be deallocated, the note said. This formula will negatively impact AES Power’s Sayang, ArcelorMittal’s Seragraha and Mahagaurai blocks with CESC and Jas infrastructure.

According to officials, the power ministry argued that nine blocks allocated to power companies that have already gained environment clearance should not be cancelled. These include Tokisud block allocated to GVK Power, Mahan to Essar and Hindalco, Jeetpur to JSPL, Durgapur/Saria to DB Power, Durgapur/Tanmar to Balco and Ganeshpur to Tata Power and Adhunik.

Besides, the government should not cancel the allocation of six entities that are set to commence power generation in two years but have not received clearances.

This rule could save Sterlite’s Rampia block, Essar’s Chakla block, Visa Power’s Fatehpur block, Adani Power’s Lohra and Hindalco’s Tubed blocks from deallocation.

The basic thumb rule that the power ministry is stressing is that coal blocks allocated to any power plant that goes on stream in the next two years should not be taken back.

During arguments last Wednesday before the Supreme Court, attorney-general G.E. Vahanvati had suggested that the government could consider de-allocating coal blocks that were given after 2005 as these were still at the allocation stage.

The Supreme Court bench, headed by Justice R.M. Lodha, gave time to the government till Wednesday to get back to it on the issue.