KOLKATA (miningweekly.com) - Even as the Indian government gets ready to launch its maiden allocation of coal blocks through competitive auction, demands have surfaced that the resource should be allocated through a ‘government dispensation route’, or based on government’s recommendations.

Leading the charge was Steel Authority of India Limited (SAIL), the country’s largest steel producer, which is owned and managed by government.

In a communication to the Coal Ministry, the steel producer said that SAIL’s production capacity would increase to 50-million tonnes a year by 2025 requiring 43-million tonnes a year of coking coal, vindicating the call that captive coal mines needed to be allocated through the government dispensation route.

Coking coal blocks sought through the allocation process by SAIL included Rabodih, Parbatpur Central, and Pachmo Kotre-Basantpur, in Jharkhand, and Kulti in West Bengal - all located in eastern Indian provinces.

To run its captive power plants, the steel producer has sought thermal coal blocks in Talabira II, Rampia and Dip Side Rampia, in Odisha, Gare Palma, in Chattisgarh, in central India and Rawanwara North in the central Indian province of Madhya Pradesh.

Justifying claims for coal blocks through government dispensation, SAIL in its communication, pointed out its five decades of experience in development, management and operations of new mines and allocation of such coal blocks would enable the steel producer to meet 50% of its coking coal requirement from domestic mines, which otherwise would have to met through imports.

However, when contacted, Coal Ministry officials conceded that they were still in the dark as to how demands for allocation through government dispensation could be considered against the backdrop of a recent Supreme Court verdict.

India’s apex court in delivering a verdict which cancelled 214 coal blocks allocated by the government since 1993, said that “all allocation through the government dispensation route suffers from the vice of arbitrariness and legal flaws”.

The officials, on condition of anonymity, said that the draft rules announced by the government had not spelled out any regulation on coal blocks allocated to entities controlled by provincial governments, which, in turn, had handed them over to private entities to extract and not to mine developer operators through standard contract for outsourced mining.

The officials also expressed reservations on whether a few coal blocks could be kept aside for allotment under government dispensation and if such a decision could stand up to legal scrutiny in view of the apex court ruling, which had come down heavily on any discretionary allotment of natural resources.