The allocation of coal blocks in India has been given new certainty, following months of speculation after the Supreme Court decided to cancel all allocations made between 1993 and 2010. The Modi government has decided on a new blueprint for the acquisition of coal mines and plans to offer them via an e-auction. Central and state government companies will be directly allocated coal blocks, but private companies will be able to bid for a pool of mines. Successful bidders would then pay the originally allotted owner of the block for the cost of the land and the investments that went into the associated equipment. End users such as cement and steel would be entitled to bid along with everyone else through the e-auction.
According to Finance Minister Arun Jaitley, “A key need for the ordinance was to ensure proper transfer of land from the existing owner to the successful bidder to whom the land is to be allotted”. He added that the proceeds of sales would go to the state governments where the land is located, rather than to the central government. It is hoped that, once properly managed, the use of Indian coal will replace US$20 billion worth of coal imports each year. The auction will be open to Indian companies only.
Coal is the main fuel in India’s cement industry and the supply of coal has been a concern for cement producers. This, in addition to the renewed optimism in the sector following the elections earlier this year, should bode well for the industry’s future.
Edited from various sources by Katherine Guenioui
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