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LATEST NEWS UPDATES | Govt panel seeks scrapping of 60 private coal blocks -Sanjay Dutta

Govt panel seeks scrapping of 60 private coal blocks -Sanjay Dutta

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published Published on Sep 3, 2012   modified Modified on Sep 3, 2012
-The Times of India

The government may be standing firm against scrapping coal block allotments to private companies but a high-level official panel for monitoring progress in these mines is pitching for largescale de-allocation to "defuse the current crisis" over Coalgate.

"Out of the 90 coal blocks allocated to private players since 1993, 60 coal blocks with 6.7 billion tonnes (estimated reserves) valued at nearly Rs 2 lakh crore can be cancelled due to lack of progress as ascertained by ministry of coal in the meeting of January 2012," says a note for the inter-ministerial group's (IMG) meeting likely on Monday.

What makes the meeting crucial is the suggestion in the note, drafted after two meetings of the group, that it "meets once again and recommends cancellation of all coal blocks that are not likely to produce coal by March 2013 due to lack of progress".

The IMG under Zohra Chatterjee, additional secretary in the coal ministry, has attained prominence since it is in the process of deciding the fate of allocations amid the current political crisis over the federal auditor's damning report on coal block allocations. The Comptroller and Auditor General's report said the government extended windfall gains of Rs 1.86 lakh crore to private players.

The tardy pace - or complete absence - of development in most of the blocks has added to the perception of sleaze. Failure to start mining even years after allocation undercuts the government's defence that it had to quickly meet rising coal demand and could not have waited till the auction regime was implemented through changes in law.

The IMG discussion paper, however, suggests that "60 blocks having reserves cited by CAG (6.7 billion (6.7 billion tonnes) can be cancelled and handed over to Coal India for development immediately as the present allocattees (sic) have not concluded land acquisition".

"To compensate the regulated sectors (power plants) which have been set up on the basis of these blocks, linkage from Coal India may be granted and fuel supply agreements signed as per policy. This will ensure that the developers do not get affected and investments in end-use plants do not get stranded and investor sentiment is not affected," the note says.

This, sources said, is also the PMO's line of thinking. Such an action would help blunt charges of windfall gains since consumers would get coal at Coal India's price. "The other sectors always retain the option of participating in competitive bidding for coal blocks or importing coal to fulfill their requirements," the note says.

The note also says similar cancellations can be done in case of 20 underground blocks. These blocks were dropped from the federal auditor's final report on the coal ministry's plea that such mines were not profitable.

The Times of India, 2 September, 2012, http://timesofindia.indiatimes.com/india/Govt-panel-seeks-scrapping-of-60-private-coal-blocks/articleshow/16226153.cms


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