Coal ministry tells states to follow draft MCA for mine operators

By: | Published: August 7, 2015 12:03 AM

After slapping showcause notices on three states for engaging mine operators without issuing tenders for the competitive bidding process...

After slapping showcause notices on three states for engaging mine operators without issuing tenders for the competitive bidding process, the coal ministry on Thursday wrote to all states asking them to adhere to the draft model contract agreement (MCA) for coal mining prepared on the basis of views received from the state governments.

The showcause notice was issued by the coal ministry last week to the state-owned power companies of Punjab, Karnataka and West Bengal for their failure to follow the due process in engaging the Eastern Minerals and Trading Agency (EMTA) as the mine operator for the mines allotted to these states.

As per the draft MCA, a state must invite request for qualification for shortlisting mine operators followed by a request for the  proposal to select one among the qualified candidates. The coal ministry, in its communique, said that the draft MCA, which is a 220-page document made available to the states after being vetted by the law ministry, was a suggestive document and states could modify it so long as it didn’t contradict the terms of coal block allocation laid down by it.

Additionally, under the MCA, even if a state government chooses to make the mine operator responsible for land acquisition and subsequent rehabilitation and resettlement process, the state would continue to be responsible for any non-compliance in these operations. The draft agreement lays out the responsibilities and privileges of the state and mine operator along with their specific duties.

The coal ministry’s notice to states followed soon after the Supreme Court, on July 21, issued contempt notice to EMTA and other entities for failing to pay the court-imposed levy of Rs 295 per tonne of coal mined before the verdict was announced for cancellation of coal blocks on September 24 last year.

EMTA’s liability to pay the levy arose from its association with the three states as the joint venture partner. In each of the three JVs, the private miner had 76% stake while the respective state had 24% ownership. The JVs mined coal from the blocks allotted to these states for their thermal power plants.

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