Post SC verdict, fate of 40 coal blocks in limbo

Post SC verdict, fate of 40 coal blocks in limbo

Post SC verdict, fate of 40 coal blocks in limbo

The Supreme Court order declaring the 218 coal blocks allotted between 1993 and 2010 as illegal has put the future of 40 captive blocks, which are currently under production, in a limbo.

“Of the 218 coal blocks allotted, 40 captive coal blocks are currently under production and another 10-12 have signed mining leases with state governments. Power producers have invested Rs 2.87 lakh crore toward exploration. The target production from these mines is 50 million tonnes for 2014-15,” an official from Coal Ministry told Deccan Herald.

If the Apex Court decides to de-allocate the mines, several big companies, including Hindalco and Jindal Steel and Power, will have to look for alternative sources of coal which may be very expensive, he added.

As the court ruling says state govt PSUs cannot undertake commercial coal production, the fate of Singareni Collieries in Telangana also in hangs in balance.

The Singareni Collieries, now owned by the Telangana government, has been mining and selling coal since 1886 in various firms even before Coal India (CIL) was incorporated in 1975.

Singareni Collieries is a 51:49 joint venture between the Centre and Telangana government and has annual production of about 55 million tonnes.

The Supreme Court observation on state government PSUs was based on Coal Mines Nationalisation Act, which makes it clear that the state PSUs can carry out coal mining only for power generation, production or iron and steel and cement and not for commercial operation by state PSUs.

“The government is studying the verdict as the Supreme Court is set to decide the fate of 218 coal blocks on September 1.

 The government is of the view that if allocations were made illegally, such allocations must be cancelled. 

At the same time, it is also of the view that if the screening committee’s procedures were flawed, then the Coal Ministry will have to examine as to how much investment has been made so far by the companies and consequent issues,” said the official.