Objectives and salient features of the Coal Mines Special Provisions Bill, 2015

• To provide for allocation of coal mines and vesting of the right, title and interest in and over the land and mine infrastructure to successful bidders and allottees with a view to ensure continuity in coal mining operations and production of coal.

• To take immediate action to auction or allot coal mines to minimise impact on core sectors such as steel, cement and power, which are vital for the development of the nation.

• To amend the Coal Mines (Nationalization) Act, 1973 and the Mines and Minerals (Development and Regulation) Act, 1957 thereby removing the restriction of end use from the eligibility to undertake coal mining except in the case of certain specified coal blocks.

• 204 cancelled blocks have been defined as ‘Schedule-I coal mines’.

• 42 producing and ready to produce coal mine out of Schedule-I coal mines are defined as ‘Schedule-II coal mines’.

• Other 32 substantially developed coal blocks out of Schedule-I coal mines are defined as ‘Schedule-III coal mines’ meant for specified end-use(more mines can be added to Schedule-III).

• The Central Government has the power to classify mines identified from Schedule I coal mines as earmarked for a class of specified end-uses.

• Allocation shall be made through auction to a company or their JV.

•In case of Government Company or their JV, allotment may be made without auction.There shall be no end use restrictions on the eligibility to participate in the auction, other than for Schedule II & III coal mines.

•‘Nominated Authority’ shall be appointed for conduct of auction/ allotment and vesting and transfer of all interests, rights and titles of these coal mines in the successful bidder or allottee. Nominated Authority to be assisted by experts and other officers.

• The proceeds of auction shall be received by the Nominated Authority and disbursed to respective States.

•Compensation only for land and immovable mining infrastructure shall be paid to the prior allottee after paying secured creditors.

• The quantum of compensation for the mine infrastructure in relation to Schedule I coal mines is determined as per the written down value reflected in the statutorily audited balance sheet of the previous financial year.

• The quantum of compensation for the land in relation to Schedule I coal mines shall be as per the registered sale deeds together with twelve per cent. simple interest from the date of such purchase or acquisition, till the date of the execution of the vesting order or the allotment order, as the case may be.

• ‘Commissioner of Payments’ shall be appointed for disbursal of compensation.

•The Central Government may appoint Custodian(s) for operation and management of the coal mines till they are allocated through auction or allotment.

• Tribunal constituted under the Coal Bearing Areas (Acquisition and Development), Act, 1957 will adjudicate any dispute arising out of any action of the Central Government/ nominated authority or any dispute between the successful bidder or allottee and prior allottee arising out of any issue connected with the Act.

As per provisions of the Ordinance and Rules framed , the auction of coal blocks was decided to be carried out in e-auction mode in order to keep the process transparent. 110 coal blocks were earmarked with specific end-use for auction and allotment. The process of e- auction commenced with the publication of Notice Inviting Tenders (NIT) on 25-12-2014 for 23 running coal mines appearing in Schedule II.

Out of these 23 coal mine/blocks, e-auction of 19 coal mines has been successfully completed in the first tranche. In the second tranche, e- auction of another 23 coal blocks from Schedule III have been put for auction with the publication of Notice Inviting Tenders (NIT) on 07-01-2015.

Out of these, e-auction of 14 coal blocks in 13 packages has been completed as on 8-03-2015. The total estimated amount of revenue likely to be raised in respect of 29 coal mines already auctioned is Rs.1.93 lakh crore. The auction proceeds shall be transferred to the respective state governments. Eastern states would be the biggest beneficiary and would financially empower them.

The Government on scrutiny of auction observed that fair value had not be obtained in respect of 4 coal mines namely Gare Palma IV/1, Gare Palma IV/2&3 and Tara in comparison of other mines put on auction. The government therefore decided to allot Gare Palma IV/1, Gare Palma IV/2&3 to Coal India Limited.

There were apprehensions about the likely response of the bidders to the new system but it is now clear that they are enthusiastic about it. For companies that need an important resource like coal , the best option is securing it through a clean & legal procedure. The auction saw very competitive and robust bidding by companies which were ready to pay high prices to ensure fuel security.

The government also allotted 38 mines to central and state public sector units including NTPC, DVC and SAIL. Among these are power generating companies of West Bengal, Chattisgarh, Jharkhand, Maharastra , Odisha, Uttar Pradesh, Rajasthan, Bihar, Punjab, Gujarat and Telangana. All the mines allotted are for the power sector except Sitanala mine given to SAIL. It is estimated that Rs1.41 lakh crore of likely revenue to States from royalty over 30 years from these 38 coal mines allotments.

As Prime Minister Shri. Narendra Modi aptly pointed out, “fetching of over Rs 2 lakh crore from auction of just 33 coal blocks has shown that policy-driven governance can rid the system of corruption. If we run the country based on policies, if we run it efficiently, the system can be rid of corruption. We can develop graft-free system. We have taken this burden and are going ahead in that direction.”