Commercial Coal Mining





Commercial Coal Mining

For management and reallocation of cancelled coal blocks, Government has promulgated ‘the Coal Mines (Special Provisions) Ordinance, 2014’ on 21.10.2014 to ensure smooth transfer of rights, title and interest in the mines along with its land and other associated mining infrastructure to the new allottees to be selected through an auction or allotment to government company, as the case may be. In order to provide sufficient coal to small consumers, medium and small enterprises, cottage industries, household consumers and to overcome the acute shortage of the country and augment its production; the Ordinance has also amended the Coal Mines (Nationalization) Act, 1973 to insert section 3(A) and the Mines and Minerals (Development and Regulation) Act, 1957 to insert section 11(A), thereby removing the restriction of end use from the eligibility to undertake coal mining, in the national interest.
As per the provisions of the Coal Mines (Special Provisions) Ordinance, 2014, a company or a joint venture company formed by two or more companies are eligible to carry on coal mining operations in India, in any form either for own consumption, sale or for any other purpose in accordance with the permit, prospecting licence or mining lease, as the case may be. The company has the same meaning as assigned to it in Clause 20 of Section 2 of the Companies Act, 2013 i.e. a company incorporated under the Companies Act, 2013 or under any previous company law. This was stated by Sh. Piyush Goyal, Minister of State (I/C) for Power, Coal & New and Renewable Energy in a written reply to a question in the Lok Sabha today.

The Minister further stated that the coal reserves are explored on regular basis in order to increase production of coal in the country. As a result of exploration carried out, a cumulative total of 3,01,564 million tonnes of Geological Reserves of coal have so far been estimated in the country as on 01.04.2014. As per information available, 100.6 million tonnes of coal has been imported in the country upto the month of September 2014 during the year 2014-15, the Minister added.
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Land over Coal Blocks

For management and reallocation of cancelled coal blocks, Government has promulgated ‘the Coal Mines (Special Provisions) Ordinance, 2014’ on 21.10.2014 to ensure smooth transfer of rights, title and interests in the mines/blocks along with its land and other associated mining infrastructure to the new allottees to be selected through an auction or allotment to government company, as the case may be. As per provisions of Section 8 of the Ordinance, the successful bidder in an auction shall be entitled to the vesting of coal mine pursuant to a vesting order to transfer and vest upon the successful bidder all rights, title and interests of the prior allottee, among others. Similar provisions are applicable for the allotment to a Government company. This was stated by Sh. Piyush Goyal, Minister of State (I/C) for Power, Coal & New and Renewable Energy in a written reply to a question in the Lok Sabha today.

The Minister further stated that the system of submission of Bank Guarantee (BG) in allocation of coal blocks was introduced in year 2005 for private companies. Subsequently, the condition of BG was also imposed on coal blocks allocated to public sector companies. 50% of the BG was linked to the milestones (time schedule) set for development of coal block and the remaining 50% to the guaranteed production as per the approved mine plan

The Minister further stated that Hon’ble Supreme Court of India in its judgment dated 25.08.2014 and order dated 24.09.2014 passed in Writ Petition (Criminal) No.120 of 2012 and other connected matters has declared all allocations of the coal blocks made through Screening Committee and through Government Dispensation route since 1993 as arbitrary & illegal and has cancelled the allocation of 204 coal blocks out of 218 coal blocks. The issue as to whether the BG deposited by the allocatees should be invoked or returned is under consideration of the Government, the Minister added.
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Production of Coal

In order to augment coal production and to address rapidly increasing demand of coal by power sector in the country, Coal India Limited (CIL) has framed a Model Contract Agreement for mining of coal in some of its mines. The responsibility of acquisition of land, obtaining statutory clearances etc shall be with CIL / subsidiary companies. The compensation for land and R&R shall be paid by CIL as per its approved R&R policy. This was stated by Sh. Piyush Goyal, Minister of State (I/C) for Power, Coal & New and Renewable Energy in a written reply to a question in the Lok Sabha today.

The Minister further stated that the contractual mine operator shall be responsible for taking physical possession of land, construction of infrastructure facilities, development & operation of the coal mine and deliver the desired quantity of coal to CIL / Subsidiary Company as per agreement. Government Does not locate or allocate mines exclusively for operation under any particular contract model. Depending upon the operational expediency, CIL or its subsidiaries award works/projects via this route.

The Minister further stated that in the Annual Plan for 2014-15, All India demand of coal of power utility sector has been assessed to be 551.60 MT against which supply from indigenous sources has been planned to be 466.89 MT (CIL: 405 MT; SCCL: 35MT & Others including captive blocks: 26.89 MT) with a gap of 84.71 MT which is envisaged to be met through coal imports. Considering the gap between coal demand and indigenous availability, Government of India has placed coal under Open General Licence to facilitate import of coal freely by anyone in the country on payment of applicable duties. Over the years, Government has also reduced the import duty on coal and in Union Budget for 2014-15, Government has rationalised the import duty for all types of coal and coke to 2.5%.

Besides the above, under the provisions of new Fuel Supply Agreements, in accordance to the Presidential Directives issued to CIL, option is also given to Power Utility sector consumers to opt for supply of a part of the Annual Contracted Quantity (ACQ) from imported coal through CIL (viz. 15% of ACQ up to 2014-15, 13% of ACQ in 2015-16 and 5% of ACQ from 2016-17 onwards). CIL has put in a modality for importing coal through a PSU supply agency to the willing power plants. During 2014-15, CIL had received a firm order for import supply to the tune of approximately 5.0 lakh tonnes. The supply is expected to be completed in 3rd and 4th quarters of the current fiscal, the Minister added.
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Work in Allocated Coal Blocks

            . During the last three years, the following coal blocks were allocated in pursuance of provisions of the Coal Mines (Nationalisation) Act, 1973. This was stated by Sh. Piyush Goyal, Minister of State (I/C) for Power, Coal & New and Renewable Energy in a written reply to a question in the Lok Sabha today. 
S. No.
Name of Coal Block
Name of the allocatee company
Date of Allocation
1.
Rajgamar Dipside (Deavnara)

API Ispat & Powertech Pvt. Ltd.
14.10.2011

CG Sponge Manufacturers Consortium Coalfield Pvt. Ltd.
2.
Vijay Central

Coal India Limited
01.11.2011
SKS Ispat & Power Ltd.
01.11.2011

Both the above-mentioned coal blocks have not started production so far
            The Minister further stated that Hon’ble Supreme Court of India in its judgment dated 25.08.2014 and order dated 24.09.2014 passed in Writ Petition (Criminal) No.120 of 2012 and other connected matters has declared all allocations of the coal blocks made through Screening Committee and through Government Dispensation route since 1993 as illegal & arbitrary and has cancelled the allocation of 204 coal blocks including the 2 blocks allotted in 2011.  In case of 42 coal blocks (37 producing and 05 likely to come under production), cancellation shall take effect from 31.03.2015.
            In addition, under the amended provisions of the Mines and Minerals (Development and Regulation) Act, 1957 and the Rules made thereunder, 17 coal blocks (14 coal blocks for power and 3 coal blocks for mining) have been decided to be allocated to Government Companies/Corporations in the year 2013.
            The Minister further stated that for management and reallocation of cancelled coal blocks, Government has promulgated ‘the Coal Mines (Special Provisions) Ordinance, 2014’ on 21.10.2014 to ensure smooth transfer of rights, title and interests in the mines/blocks along with its land and other associated mining infrastructure to the new allottees to be selected through an auction or allotment to government company, as the case may be.  The allocation of coal blocks would now be made in pursuance of the provisions of Ordinance and Rules made thereunder in a time bound manner to ensure that there is no disruption in supply of coal.  The auction of coal blocks is decided to be carried out in e-auction mode in order to keep the process transparent, the Minister added.
Commercial Coal Mining Commercial Coal Mining Reviewed by Ajit Kumar on 8:21 PM Rating: 5

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