Business & Economy

ASSOCHAM: Allot cancelled coal blocks to those with operational projects

NetIndian News Network

New Delhi, October 27, 2014

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) today suggested that the government shoul give preference in allocation of cancelled coal blocks to those who have an operational or soon to be operational end-use-project. 
Auctions should be opened for others only after coal for these projects is secured, it said.
In a note submitted to the Prime Minister's Office (PMO), the apex industry body stated that coal blocks already allotted for end-use steel projects should be auctioned only for steel projects and, similarly, blocks allotted for end-use power projects be auctioned only for power projects.
"The reserve price and upfront payment should be based on actual mineable reserves only (as assessed by CMPDIL/MECL etc) and not on the basis of geological reserves. The sub-blocking should remain as it is and clubbing of blocks should be avoided so that the end-use plants of small capacities can also bid in the auction process," it said.
"Clearances accorded to the existing coal blocks should automatically get transferred to the new allottees. Obtaining these clearances again will lead to considerable delays in commencement of production from mines and adversely affect the end-use projects," the note said.
ASSOCHAM said bidding for end-use power as well as steel projects should be on the basis of upfront payment fixed by the Ministry of Coal and extractable reserve linked payment quoted by the bidder in INR/tonne.
Referring to the compensation to be given to original allottees, the chamber said, criteria should be land prices as determined by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and other investments made in the coal block at current market value.
ASSOCHAM says that auction process should accord Right of First Refusal (RoFR) to the existing allottees of the coal blocks who have end-use plants either operational or soon to be operational or to those who have taken substantial effective steps to set up end-use plants.
"End-use-projects are interlinked with specific mines in terms of proximity, evacuation arrangement and giving RoFR would ensure that no additional burden is put on the already stressed infrastructure facilities and will be in national interest. Denying RoFR will severely affect the interests of the genuine companies who had invested huge amount of money in their end use plants and have taken huge loan from the banks for setting up the same," it said.
In the interim period till the time auction process is completed, ASSOCHAM suggested that original coal block allottees can be appointed as Contractor/MDO and unconditional FSA should be provided in cases where the end use project is either operational or is about to become operational. In case the coal block allottee is not successful in obtaining the coal block under the auction process, government must ensure restoration of coal linkages granted prior to allocation of coal blocks.

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