1. Ahead of coal blocks auction, Centre adds another land wrinkle

Ahead of coal blocks auction, Centre adds another land wrinkle

Even after 176 technical-cum-financial bids have been received by it for the first set of 23 captive coal blocks, the government continues...

By: | New Delhi | Updated: February 5, 2015 5:12 AM
coal block, coal block news, coal block news auction, coal block auction news, coal block auction in India, resettlement and rehabilitation

Even after 176 technical-cum-financial bids have been received by it for the first set of 23 captive coal blocks, the government continues to shift the goalposts, upsetting the bidders’ calculations. (PTI)

Even after 176 technical-cum-financial bids have been received by it for the first set of 23 captive coal blocks, the government continues to shift the goalposts, upsetting the bidders’ calculations. While last week it made the compensation to be paid to the prior allottees for “mine infrastructure” open-ended, the government on Tuesday promptly followed that up with a new fiat that would inflate it further by stipulating that land earmarked for resettlement and rehabilitation (R&R) and afforestation would be valued the same way as the coal-bearing land.

This implies that R&R and afforestation land would be ascribed a value that is equal to the registered sale price plus 12% simple interest on the same annually from the purchase date to the date of allotment to the successful bidder. The Coal ordinance had differentiated the two types of land: It considered the land for the purpose of R&R and compensatory afforestation as part of mine infrastructure and said its valuation was to be decided “as per the written down value reflected in the statutorily audited balance sheet (of prior allottee) of the previous financial year”.

This distinction has now been done away with, apparently in the belief that it could be legally hazardous.

A government official said: “We discussed the matter internally and concluded that valuation methodology for land should be same irrespective of type and usage.”

Industry experts, however, pointed out that the changes proposed in the ordinance could be legally contestable. Further, the last-minute changes makes the situation fluid and uncertain for firms wanting to grab the blocks that are under production. The annual production capacity of the 74 coal blocks where mine infrastructure is in place is reckoned to be over 180 million tonnes. To put this in perspective, Coal India produced 485 million tonnes last year.

The e-auction process for cancelled coal blocks has already seen major companies like Jindal Steel and Power (JSPL) and GVK Power approaching the courts seeking a stay. While JSPL argued that change of end-use for its previously held mine would stall mining in the block, GVK Power contented the government undervalued its existing mine infrastructure.

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