Have right to allocate coal blocks, Centre to tell SC

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SummaryThe Centre has decided to tell the Supreme Court that it is legally empowered to allocate coal blocks and is marshalling facts to make a strong case before it, a senior official said.

The Centre has decided to tell the Supreme Court that it is legally empowered to allocate coal blocks and is marshalling facts to make a strong case before it, a senior official said. Coal secretary SK Srivastava told FE: “We will present our case (before the apex court) on March 12 where we would say that coal being a nationalised sector, the Centre derives power to allocate coal blocks from various acts such as Coal Mines (Nationalisation) Act, Coal Bearing Areas Acquisition & Development Act. However, the attorney general would go into the details of the existing provisions before finalising our reply.”

Last week the Supreme Court questioned the Centre’s authority to allocate coal blocks during the hearing of a public interest litigation regarding 'coalgate'. The court observed that the existing policy ( where coal blocks are “allocated” by the Centre while mining leases are granted by states concerned) gave no choice to states as they have to grant mining leases to whoever is allocated the block by the Centre. It felt that the Centre has a lot of “legal explanation” to do as the statutory Act empowers only the states to undertake the task of allocation (licensing).

Srivastava said that the court has just made an observation and the ministry is confident that it has sufficient grounds to prove its point. While there are fears that the SC's observations could affect the Centre's liberal captive coal policy (under the policy, blocks are auctioned to private players while the PSUs and government departments are allocated blocks on a nomination policy), the coal ministry put up a brave face.

“We have not decided to postpone the coal auction process pending the issue. But will see how the matter develops before taking a final call,” Srivastava said. The court had said the Mines and Minerals (Development and Regulation) Act did not provide for the Centre to allocate coal blocks. Incidentally, the Centre amended this Act in 2010 to pave the way for auction of captive coal blocks and reserve blocks for PSUs.

The coal ministry was ready to start auctions of 12 coal blocks under the new policy on coal block allocation. It has also invited applications from government companies for allocation of 17 coal blocks having reserves of 8.5 billion tonnes under the auction route. The completion of bidding process in these cases is expected to be held up till March when the Supreme Court is expected to clear the issue.

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