Hurdles remain in implementation of coal mine ordinance

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Coal Mines | Published: November 25, 2014 1:16:15 AM

In order to operationalise the provisions of the Coal Mines (Special Provisions) Ordinance, 2014...

In order to operationalise the provisions of the Coal Mines (Special Provisions) Ordinance, 2014, the government has placed the draft process in public domain for inviting comments before finalising the same this week. The draft reiterates the government policy to safeguard the exchequers’ money invested in the PSUs in power, steel, cement and sponge iron (with no representation) sectors by prioritising them in the bidding process for e-auctioning.

The second objective is to make the now-infamous coal mining allocation process fully transparent with little left for individual discretion at any level. The task is undoubtedly challenging and one can only appreciate the efforts of the coal ministry in plugging the various loose ends. The SC has trifurcated the 204 coal mines into already operational (42 under Schedule-II), ready to be operational (32 under schedule-III) and other 104 non-operational ones (Schedule-1). Thus the eligibility criterion in each of these groups needs to be framed differently.

Here comes the third objective of the government to assess the genuineness and authenticity of the bidders. For schedule-II, one must have invested 80% of the total project cost and for schedule-III, the cut-off mark is 60% investment of the total project cost. The two-stage process of evaluation of the bids, namely, technical and financial bids for evaluation, is appropriate.

The fourth objective is to form separate committees in each stage of evaluation (technical/financial), determining the floor price, preparation of mine dossier, collection of fees based on the geological reserves of the mines (given in a tabular form) and various other areas.

In order to pursue an independent, effective and focused process, the government has created too many agencies. There are Nominated Authority, Commissioner of Payments, Designated Custodian for each mine (for ORM plan) and experts. Each of these committees is being made a mini organisation with its own team of officials (mostly drawn from other departments) to monitor activities in their own domain.

The general concern remains about the smooth coordination among these committees and their team of working officials and criss-cross references during implementation and actual operation at various stages, which may slow down the whole process and make it ineffective.
Firstly, coordination among various committees even in the same government department has never been a forte in governance in the past. The periodic review of each stage of the process may be done at the highest level in the initial stages preferably during Cabinet meetings keeping in view the sensitivity of the subject.

Secondly, the public sector entities have been permitted to take assistance from Mining Development Operators (MDO) in mining like SAIL has recently done. The joint ventures with private units have been ruled out. The rationale of preventing diversion of coal resources for purposes other than the stated ones may be implemented cautiously as many large MNCs have set up MDOs as downstream expansion strategies or are in the business of funding the unit.

The third issue relates to setting up of a system of uniformity in areas of compensation to the prior allottees of the mines by the successful allottee to own/utilise the movable property used in coal mining operation. The scope of negotiation in deciding compensation, which is the standard practice in private negotiation, may not suit the extant guidelines of the public utilities. The differences in negotiated compensation levels at different mines may also lead to legal complications in the subsequent phase.

The author is DG, Institute of Steel Growth and Development. The views expressed are personal

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