Kumardubi colliery
Kumardubi colliery in Jharkhand's Dhanbad district.. [Representational Image]Creative Commons/Bishwajit Sharma

Ahead of the Supreme Court's to decision to cancel over 200 coal blocks, the Union Cabinet has cleared an ordinance allowing e-auction of the blocked coal mines to private cement, steel and power industries and direct allotment to public sector companies.

"The Cabinet has recommended promulgation of an Ordinance to the President in order to resolve the pending issues particularly the situation arising out of the Supreme Court judgement quashing the allocation of the coal blocks," PTI quoted Finance Minister Arun Jaitley as saying at a press conference.

The apex court had on 24 September cancelled 214 of the 218 coal blocks allocated since 1993 stating that those were allocated illegally. To make sure the SC's decision does not affect the power sector massively, the central government came up with the ordinance to fast track the re-allocation process.

The reformed process is said to be transparent this time and would take not more than "three to four months." Also, only the companies incorporated in India will be allowed to take part in the bidding process "for which the reserve floor price will be determined by a committee and the auction will be sector-specific."

"...the actual users of coal in the cement, steel and power sectors who apply for a certain number of coal mines will be put in the pool and there would be an e-auction. A sufficient and adequate number of mines would be put so that actual users go back with the mines," Jaitley said.

For now, the Centre has allowed private cement, steel and power industries to participate in the bidding process, but in near future more private companies will be allocated mine blocks for commercial purpose.

"There will be an enabling provision for the future where under rules which are framed for commercial users of mines could also be decided by the Central government. This would lead to an optimal utilisation of the natural resource," Ministry of Power Piyush Goyal said.

To enable commercialisation in mining industry, the Union government will amend the Coal Mines Nationalisation Act, 1973, however, the amendment would in no way affect the Coal India Ltd and other PSUs.

"This process would not in any way impact the structure of Coal India. Coal India would continue to function as it is and all the mining requirements of CIL in present and future will be adequately protected,' Jaitley said.