Govt’s Ordinance allows swapping of coal blocks among common end-users

Even as the Government is getting ready to ensure transparent electronic auction (e-auction) of 74 coal blocks (42 reserves which are operational and 32 which are almost on the verge of getting functional) before March 2015, an interesting clause in the Ordinance promulgated by the President indicates that if a bidder loses out on a mine which he had mined over a period of time before it got de-allocated, to another bidder, then he can swap it with the new owner, provided both bidders are common end-users.

Sources pointed out that while candidates who had prior allotment of coal blocks are also eligible to participate in the e-auction of the 74 blocks, provided they don’t have any criminal proceedings pending against them, they can even get back their de-allocated block, if it has gone to another successful bidder after the auction.

A particular coal block, which was held by a prior allottee and on which he had been working upon over the years before it got de-allocated, may go to another allottee after the e-auction exercise.

Sources, however, said that in such a case, this particular block can be regained by the original allottee as the Ordinance has a provision wherein the original allottee can enter into an agreement with the new owner of that reserve to swap it, provided both the parties have common end-usage of that block.

In other words if an allottee is a power company then it can only swap a block which is meant for end-use of that sector.

Chapter 5 and Para 20 (1) of the Ordinance titled ‘Certain Arrangements’ indicates this kind of swapping, as it says that "a successful bidder or allottee or coal linkage holder shall, with prior approval of the Central Government and in accordance with such rules as may be prescribed, be entitled to enter into certain agreements or arrangements with other successful bidder or allottee or coal linkage holder, as the case may be, for optimum utilisation of coal mine for the same end uses in the public interest and to achieve cost efficiencies".

Para 20 (2) of the same chapter adds that "a successful bidder or allottee may also use the coal mine from a particular Schedule I coal mine for any of its plants engaged in common specified end uses, in accordance with such rules as may be prescribed".

Meanwhile as per the Ordinance, a prior allottee (one who had owned a block before it got de-allocated), can participate in the forthcoming e-auction exercise not only if there are no criminal proceedings pending against him, but also after he makes a payment of an additional levy within a particular time frame.

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