Emphasising that a mine developer and operator (MDO) is just a contractor selected through competitive bidding, the central government on Tuesday said that engagement of MDOs in coal mines is regulated through statutory provisions.

The centre’s response came after media reports had alleged that the government brought in revised regulations to aid Adani Group in retaining its MDO deals that were inked before the Supreme Court, in its ruling in 2014, cancelled allocations of 204 coal blocks.

“MDO works as a contractor and does not inherit any right of ownership in the mine allotted to the government companies. The ownership of coal and of the mine remains entirely with the coal mine allottee company,” Coal Ministry sources said.

There is no legal impediment in an MDO being a 100 per cent privately owned company. Likewise, the law does not prohibit a public-private joint venture being selected as an MDO, said one of the sources.

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“In order to ensure transparency in the engagement of an MDO, the same is regulated by statutory provisions. The erstwhile auction under Competitive Bidding of Coal Mines Rules, 2012 and the Coal Block Allocation Rules, 2017 ensures that the MDO is selected through a competitive bidding process,” he added.

Additionally, the criteria of bidding is not linked with the prices notified by Coal India (CIL), the source said, adding that neither the engagement of an MDO nor the transparent and competitive selection mechanism is in violation of the Supreme Court’s judgement.

Engaging MDOs

The prerogative to engage an MDO solely lies with the mine allottee and the Centre has no role to play. It is purely a commercial decision, another source said.

In the case of mine allotment to those allottees whose allocations stood cancelled by the Supreme Court judgement, the statutory provision under CMSP Act (S11) provides complete discretion to the said allottee to adopt all such contracts which subsisted at the time of cancellation, he added.

Again, it is for the allottee to take a decision, for its commercial benefit, whether to engage the previous MDO or not. The Centre has no role to play in the said decision-making process. The said discretionary power lying solely in the hands of allottees finds strength from the judgement of the Supreme Court in the case of Punjab State Power Corporation (PSPCL) vs EMTA Coal, the official said.

On the issue of MDO appointment by the Rajasthan Rajya Vidyut Utpadan Nigam (RRUVNL), a Rajasthan government PSU, another official said that the PSU holds a minority stake in the MDO company.

“RRVUNL holds the mining lease and all the other statutory clearances. Hence, it is the sole owner of the coal blocks and coal mined from the blocks is utilised in the end use plants of RRVUNL located in Rajasthan. MDO was selected in 2007 by RRVUNL and after re-allotment of the mine, RRVUNL has novated the previous MDO contract which is legally permissible,” he explained..

Undue favours to Adani Group

Media reports have claimed that the central government prepared a model MDO contract in which parts of or the entire contract could be kept away from citizens’ scrutiny. It was also alleged that a provision was inserted in the law allowing State governments, which were freshly allotted mines, to continue the MDO contracts that the previous owner of their mines had before the Supreme Court cancelled them in 2014.

This allowed States freedom of not conducting a new round of auctions to find which private player is willing to charge the least to mine the coal. The MDO contracts that had been annulled due to the Supreme Court orders could now be reinstated with the same company even if the coal blocks changed hands between State government-owned firms.

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