Cabinet okays policy to allow PSUs to surrender non-operational coal mines

• Post cancellation of coal block allocation by the Supreme Court in 2014, the government had allotted many cancelled coal blocks to state and Central PSUs
• Till December 2021, 45 mines out of 73 coal mines allotted to state and Central PSUs remained non-operational

New Delhi: The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has approved the Ministry of Coal's proposal for providing a one-time window to Central and state PSUs to surrender non-operational coal mines without penalty (forfeiture of bank guarantee) and without citing any reason. "This may release several coal mines which the present PSU allottees are not in a position to develop or are disinterested and could be auctioned as per the present auction policy. Three months' time will be granted to the allottee Government Companies to surrender the coal mines from the date of publication of the approved surrender policy," said the government in a statement released on Friday.

45 out of 73 allocated coal mines non-operational

Post cancellation of coal block allocation by the Supreme Court in 2014, to prevent immediate disruption of coal supplies to thermal power plants, the government had allotted many cancelled coal blocks to state and Central PSUs on allotment route. The allocation route was expeditious and it was expected that the coal requirement of state GENCOs would be met from those blocks. The revenue share payable by state/Central PSUs is fixed on per tonne basis unlike private sector who have to bid. Given the context of allocation of coal blocks at that point of time, conditions for timelines for operationaliSation of coal blocks were very stringent and firm, leaving no wiggle room either to the successful allottee or the Nominated Authority. Penalisation for delay in operationalisation of coal mines has resulted in disputes and court cases.

Till December 2021, 45 mines out of 73 coal mines allotted to state and Central PSUs remained non-operational, with the due date of commencement of mining operations already over in case of 19 coal mines. Delays were due to reasons beyond the control of allottees, for example, law and order issues, enhancement in the area of forest from what was declared earlier, resistance of land-holders against land acquisition, and geological surprises in terms of availability of coal resources.

Coal mines surrendered by PSUs to be auctioned off

Coal Minister Pralhad Joshi recently said in the Parliament that coal sector is key to energy security for the country. After the CCEA approval, good quality coal blocks which were allotted early can be quickly recycled back after removing technical difficulties and adjusting boundaries and offered to interested parties under the recently launched commercial coal mines auction policy, said the government. Early operationalisation of coal blocks will provide employment, boost investment, contribute to economic development of backward areas in the country, reduce litigation and promote ease of doing business leading to reduction in import of coal in the country.

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