A wrong corrective

The Supreme Court’s final order on coal mine allotments, cancelling all but 14 out of 218 blocks awarded between 1993 and 2012, is truly unfortunate. The court has applied the guillotine uniformly, sparing not even the 42 blocks where coal is already being extracted or which are ready for mining. The sweeping order may be the logical corollary of declaring the allotments “illegal and arbitrary”. But in choosing to use a broad legal brushstroke and thereby losing sight of pragmatic detail, the court has failed to accord due importance to the fact that allottees have made investments of several thousand crores in developing the blocks and setting up coal-fired plants; besides, there is a risk that the large sums of bank money lent to these projects could turn into non-performing assets. There is uncertainty now on the fate of end-use power and steel plants. Where is the coal to sustain their operations going to come from? There is no guarantee that the de-allocated blocks would revert to them, more so in the event of their being auctioned.

A more sensible and fair approach would have been to de-allocate only the 160-odd blocks that are not producing or for which mining leases haven’t been executed. In many cases, there is reasonable suspicion that the allottees were mere squatters and had no plan to develop the blocks at all. But the blocks producing coal, the right recourse may have been to impose a penalty on their allottees, equal to the presumed loss to the exchequer from the illegal and arbitrary allotments for every tonne of coal extracted. The court, instead, has delivered a twin blow by ordering the allottees to pay an additional levy of ₹295 a tonne for all the coal mined so far — amounting to some ₹10,000 crore — and also surrender their blocks.

The only way out now for the Centre is to allow Coal India to take over these mines so that supplies to end-use plants continue unhindered. If a power station has come up in the vicinity of a particular block, there is no sense in running it with coal transported from elsewhere, which will only push up electricity tariffs. The Centre must also quickly formulate a clear policy for allocation of coal blocks through open bidding or any other transparent system based on consistent and objective norms. This should be coupled with opening up commercial (as distinct from captive) coal mining to private players, both domestic and foreign. India today needs professional mining companies which can bring the latest technologies to extract maximum coal at minimum cost with least environmental damage.

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