President Pranab Mukherjee on 21-10-2014 okayed an ordinance for auctioning the 214 coal blocks whose allotments were cancelled by the Supreme Court in September.
The Cabinet Committee on Economic Affairs had on Monday recommended promulgation of the ordinance to acquire the blocks to break the logjam over the cancelled blocks, sparking fears of choked coal supplies. Under the usual process, the ordinance would now be sent back to the coal ministry, which would forward it to the law ministry for notification.
Under the ordinance, the government would allot mines to public sector companies, including state electricity boards or state government's mining ventures without bidding. But private companies would have to bid for blocks that would be put under a Central pool. Only that generation companies, steelmakers and cement manufacturers with end-use plants would be allowed to bid for blocks.
The bidding would be done through e-auction method with the aim of ensuring transparency and maximising bid price. Government would put sufficient blocks in the pool for the private sector players.
The ordinance would also have an enabling provision to allow commercial mining by private companies in future. All proceeds from the auction would go to the coal-bearing states. Jharkhand, Odisha, West Bengal and Chhattisgarh would be the biggest beneficiaries. Madhya Pradesh, Maharashtra and Andhra Pradesh would also benefit.
All companies, except those convicted by courts, will be allowed to participate in the auction and there would be no right of first refusal and all bidders would have to compete in the e-auction through reverse bidding.