1. HC orders two mines off the block, more could follow

HC orders two mines off the block, more could follow

In what portended the threat of judicial orders hampering the process of reallocation of coal blocks, the Delhi High Court...

By: | New Delhi | Published: February 12, 2015 1:49 AM
mine ordinance, Narendra Modi, Iron ore mining, Pranab Mukherjee

It is not immediately known if these companies will also take legal recourse. (Reuters)

In what portended the threat of judicial orders hampering the process of reallocation of coal blocks, the Delhi High Court on Wednesday directed the Centre to withdraw two mines previously held by Jindal Steel and Power (JSPL) from the auction table till the designated technical committee reviews their new end use.

On a day JSPL, which challenged the change in the end use of Gare Palma IV/6 and Utkal B1 blocks from steel to power, got relief from the HC, Bhushan Steel approached the same court contesting a similar shift in end use of the Jamkhani coal block in Odisha. The court admitted its petition, which will be heard on February 16.

While JSPL and Bhushan Steel have expended funds to obtain the necessary clearances for these coal blocks meant for their steel units, a clutch of other companies including Hindalco, Tata Steel and Tata Sponge have also had to grapple with the travails of end-use change, as the government had shifted as many as 20 coal blocks to the power sector before it commenced the auction process. The new end use of Talabira-1 mine feeding the captive power plant of Hindalco’s Hirakud aluminium complex is “power generation”.

It is not immediately known if these companies will also take legal recourse. It may be recalled that GVK Power had earlier approached the Delhi HC contesting the alleged undervaluation of its “mine infrastructure” by the government-appointed committee, requiring it to accept a lower compensation amount that it had spent to create the infrastructure.

Government sources, however, asserted that the interim court ruling on JSPL case won’t adversely affect the auctioning process. Power minister Piyush Goyal said that the two coal blocks would soon be sent to the technical committee for review of the end use.


On Thursday, the government will announce the names of technically qualified bids among the 176 it has received for 23 operational coal blocks among the lot cancelled by the Supreme Court. The two blocks set aside by the court are not “producing blocks” and so are not part of the auction process that is set to take place from February 14 to 22. These blocks are, however, part of the 101 blocks that the government is planning to auction by the end of this fiscal year.

The committee in charge of specifying end use for coal blocks had set aside nearly 20 coal blocks with the possible production capacity of 50 million tonnes per annum for the power sector to augment power generation by 10,000 MW. These coal blocks previously had been allotted different end uses like production of steel, sponge iron, pig iron, cement and captive power.

The JSPL counsel argued that as per the coal ordinance, payment of penalty was the only eligibility criterion for bidding for mines and that government did not have any jurisdiction to fix the end use for coal blocks.

Attorney general Mukul Rohatgi said that the ordinance allowed the Centre to pool blocks and allocate them to specific sectors. JSPL can’t claim any rights over coal blocks after the Supreme Court ordered the cancelling of 204 blocks, the AG added.

As per the rules of auction, the blocks reserved for the power sector will undergo reverse bidding where the bidder with the lowest price offering per tonne of coal will be declared the winner. The same cost of coal will be passed on to the consumers leading to lower power tariffs. However, for other unregulated sectors like cement, steel, sponge iron and captive power, the bidding process will be forward in nature that will see a bidder quoting the highest amount for coal declared the winner.

“We will abide by the court’s order and set aside these blocks for review by the technical committee. Since the court order is specific to only these two blocks, there will not by any impact on either the upcoming round of auction at the end of this week or other rounds later,” a government official said.

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