KOLKATA (miningweekly.com) – In a sign of times of surplus, neither India’s Ministry of Coal or Ministry of Power was willing to take charge of seven coal mines, lying idle for the last nine months.
The Coal Ministry was seeking to hand over the seven coal mines with aggregate production capacity of close to 46-million tons a year to the Power Ministry, but the latter was not willing to take over the mines unless each mine came bundled with all government mandatory approvals like environmental and forest clearances.
While the Power Ministry was insisting that the nine coal mines be handed over “ready for production with all mandatory approvals built in with the assets”, the Coal Ministry had taken a stance that “onus of securing all mandatory approvals rested on the companies which were finally allocated the assets”, according to a senior government official.
Off the record, officials acknowledged that the tussle over handing over the nine coal mines was indicative of a lack of appetite among investors to buy coal mines during a coal oversupply.
They conceded that the Power Ministry’s stance on not taking charge of the mines stemmed from the belief that it would be difficult to find takers of the assets unless they were made “plug and play”, as few miners would be willing to prolong the gestation period of the assets by seeking all mandatory approvals to turn them into producing mines.
However, it was pointed out that current rules governing coal blocks did not have any clarity on allocating “ready-made assets” to miners or end users and, until now, the responsibility of securing mandatory approvals invariably had vested with the company securing the mine.
In the case of the seven coal blocks, the Coal Ministry was to hand over the blocks to the Power Ministry based on the recommendation of a technical committee, which had identified the blocks as suitable for the power sector.
The delay in operationalising the coal blocks was also attributed to a lack of clarity on who to allocate these blocks to. While the technical committee had recommended allocation to the power sector, and the Power Ministry favoured handing them over to provincial power distribution companies, a section within the government maintained that these companies did not have the financial muscle required to bring the coal blocks back to production.