In a move that would give a fillip to steel, power and cement projects, the government is planning to change the way captive coal blocks are allocated. According to a Planning Commission proposal being considered by the coal ministry, companies which lose captive coal blocks owing to environmental issues, and are, therefore, forced to defer construction of projects, would be given alternative blocks on a priority basis. If these companies have already made capital investments in the projects and their captive coal blocks are declared out of bounds by the environment ministry, they would get new coal blocks without having to go through the bidding process.
The environment ministry?s recent ?no-go? policy had put over 200 coal blocks out of bounds for mining. Several of these blocks were already allocated to companies which had planned or even begun to make big investments, relying on the coal supply from these captive blocks. Although the ministry has lately shown willingness to consider clearing projects even in no-go areas, the new proposal on alternative coal blocks is expected to clear the air over the future of a large number of projects.
Government sources said the new policy framework for captive coal blocks would be put in place before the next set of allocations. A note finalised by a working group headed by Planning Commission member B K Chaturvedi and comprising the coal secretary, the power secretary and the advisor to the law minister has said that companies that have made substantial investment in projects (placed orders for plant and equipment, acquired land and made irrevocable financial commitments) be given preference in allotment of alternative coal blocks, if their existing mines are banned for mining under any government policy.
?The proposed policy will help in removing uncertainty that has clouded several infrastructure projects. It will also help in bringing back investor interest as they will now be more sure about government policies,? said a former SAIL chairman who did not want to be named.
The proposed policy on alternative coal block may not shower benefits on projects that have failed to take off or where there is a delay on part of the developers. The Chaturvedi panel draft has said that such companies (which have not made any investment in their respective projects or Category B projects) would not get priority in alternative coal block allotment and would have to participate in a competitive bidding process. However, such companies will be guaranteed allotment as a co-allottee with the successful bidder.
A source in the Planning Commission said the new policy would also give preference to large projects such as Ultra Mega Power Projects (UMPPs) for awarding alternative coal blocks. ?The new policy is being considered as otherwise problems (of the kind the no-go policy has created) might crop up in future too,? said the official involved in the drafting of the Planning Commission policy note.
The need for a policy change on captive coal blocks has been felt now as a Group of Ministers (GoM) deliberating a long-term policy on coal mining is expected to conclude its discussions soon. While the new policy will follow conclusion of the GoM meetings, it is likely that this aspect of the panel report may also be implemented for some of the existing blocks that have come in the no-mining zone. Already, the GoM has cleared two alternative blocks to Essar and Hindalco in Madhya Pradesh in the Mahan coalfields. The coal blocks earlier allocated to these companies come under the no-go areas.