Centre Pushes Legislation on Auction of Coal, Other Minerals

Amid protests by the opposition, the government on Monday pushed in the Lok Sabha for the enactment of two legislations, replacing ordinances, promulgated earlier, that call for auctions for coal blocks and mines for prospecting.

The Coal Mines (Special Provisions) Bill, 2015 provides for the auction and allocation of coal mines to successful bidders through a transparent bidding process.

The government promulgated the ordinance for auction and allocation of coal blocks last year following the Supreme Court's cancellation of 214 allotments made between 1993 and 2010 as having been done in an ad hoc and arbitrary manner.

Finance Minister Arun Jaitley presenting his first full union budget on Saturday described the coal auctions as one of the three major achievements of his government along with the Jan Dhan Yojna and Clean India initiatives.

In this connection, Jaitley told parliament that "earlier the states only got benefits of royalty. Now, by the transparent auction process that we are carrying out, the coal-bearing states will be getting several lakhs of crores of rupees which they can use for creation of long-awaited community assets".

The ongoing e-auctions have already yielded impressive revenue. The government had till last week raised nearly Rs.84,000 crore through the blocks sold, and the e-auctions will lead to lower power tariffs, Coal Secretary Anil Swarup has announced.

The auction is on the basis of tariff-based reverse bidding where the end-use is power generation, and forward bidding for production of steel, cement and generation of power for captive use.

While the criteria for calculating the floor price for bidding is based on state miner Coal India's (CIL) price of coal of the same grade, the auction also has a ceiling price for power sector bidders to keep the lid on power tariffs.

Moreover, the coal ministry on Sunday received 107 applications from state-run undertakings like NTPC, SAIL and the Damodar Valley Corp for allocation of 43 coal blocks.

Introduced last week in the Lok Sabha, the Mines and Minerals (Development and Regulation) Amendment Bill, 2015 also seeks to replace an ordinance promulgated earlier to introduce a system of auction in granting prospecting licences.

As per its provisions, there will be no renewal of any mining concession, unlike the original act of 1957. Also, the licence will be for 50 years, as against 30 now, after which there will be no renewal but compulsory auction.

The government has already identified 199 mines for auction.

The proposed legislation also calls for the setting up of a District Mineral Foundation where mining takes place that will address the grievances of the people affected by mining, with a contribution not exceeding a third of the royalty rate.

Opposition parties, notably the Biju Janata Dal, have been opposing it saying it infringes on the rights of the states -- a stand supported by the Congress party and the Trinamool Congress. The opposition prevented its introduction in the Rajya Sabha.