The
prime minister in his written statement laid on the table of both the Houses of
Parliament amidst din, said, amongst other things, that the Left Front
government in West Bengal had opposed the auction process for allocation of
coal mines. This is a distortion of facts. We are reproducing below a note on
this entire matter that explains the stand of the CPI(M)-led Left Front
government on this matter.
IN the context of the
shift of strategy of the Coal India Limited (CIL) and its subsidiaries on the
issue of mining of coal in the public sector, the central government took a
policy decision in the mid 2000s to open up the coal sector to the private
players in keeping with its policy framework to deregulate and privatise – a
departure from the hitherto-followed-policy to strengthen the public sector in
overall national interest. The policy of the central government was essentially
tailored on the recommendations of the Hoda Committee, which the Left Front
government had found detrimental to the growth of domestic industries.
With the ‘Policy
Resolution on Industries, 1994’ in place, the Left Front government was
mandated to achieve its Eleventh Plan objectives with focus on the core sectors
like power and steel. Keeping this perspective in view and fully sensing the
unfolding realities, the Left Front government requested the central
government to allocate Coal Blocks, which the Coal India Limited and its
subsidiaries were not inclined to mine, to the state government to meet the
industrial requirements of the state.
The union coal secretary
vide his letter No. 13016/18/2005-CA.1 dated 21st September 2005 wrote to the
chief secretary to the government of West Bengal that “the central
government is considering allocation of suitable Coal Blocks to state government
undertakings /companies through government route provided that the state
undertakings/ companies, i.e. Mineral Development Corporation /Power Utilities
etc. are authorised to undertake coal mining in terms of the provisions of
their Memorandum and Articles of Association .”
Subsequently, the
central government constituted a Screening Committee with union coal secretary
as chairman where representatives of various state governments were invited for
discussion and decision on the allocation of Coal Blocks after examining the
applications received from the state governments as well as from the private
entities. So far as the Left Front government of West Bengal is concerned,
it requested the central government from time to time to allocate 20
Coal Blocks in favour of the West Bengal Mineral Development and Trading
Corporation (WBMDTC)/ West Bengal Power Development Corporation Ltd (WBPDCL),
under State Dispensation route through Screening Committee mechanism. The state
government vide Commerce & Industries’ Department letter No. 10694
/Pr.S/C&I dated 18th June, 2007 submitted a list of 20 Coal Blocks (all
located within the territorial boundary of West Bengal) for allocation.
It is to be noted in
this connection that the Trans Damodar and Ichhapur Coal Blocks had already
been allotted by the central government in favour of WBMDTC on 14.01.2005 and
02.08.2006 respectively.
LF GOVT OPPOSED PRIVATE
PLAYERS
Again, the state
government through chief secretary’s letter No. 314-CS/2007 dated 24th October
2007 explained the state government’s perspective for allocation of Coal Blocks
under State Dispensation route as well its concern against central government’s
preference for the private players which constituted a marked departure from
central government’s own policy as communicated vide No. 38035/2/97-CA dated
12th December 2001 and No. 13016/18/2005-CA.1 dated 21st September
2005.
The state
government further vide chief secretary’s DO letter No. 314-CS dated 24th
October 2007 wrote: “One of the options to meet… the requirements of coal for …
the projects is, of course, to ensure availability through Coal India Ltd., and
particularly Eastern Coalfields Limited (ECL) and Bharat Coking Coal Limited
(BCCL). However, during our discussion with representatives of CIL, ECL and
BCCL, it transpired that the present availability of coking and non-coking coal
with these companies do not permit them to meet these additional requirements
even in the foreseeable future.
“The second option,
therefore, is to ensure availability of coal to these new projects through
exploration and mining of virgin coal blocks recently put up for allocation by
your ministry. But, at the same time, the state government is opposed to the
idea of direct allocation of such coal blocks to these companies to guard
against chances of diversion, non-utilisation/part utilisation and related
unforeseen possibilities. The state government would like the West Bengal
Mineral Development and Trading Corporation Ltd (WBMDTC), which is a fully state
government owned corporation for mining and trading operations, to operate
these new Blocks for meeting the requirement of new greenfield steel and power
projects in the state.
“To our surprise,
however, it has been observed that the Coal Screening Committee recommended
allocation of such Coal Blocks to private companies in spite of specific
recommendation of the state government that such Coal Blocks should be
allocated only to WBMDTC. The recent recommendation of the Screening Committee
on Gourangdih ABC may kindly be referred to. The state government is also
unable to understand as to why private companies are being recommended for
allocation of Coal Blocks which have been specifically earmarked for State
dispensation/ government company route. In fact, all the 20 that we have
previously requested for allocation to WBMDTC – all being to this specific
category of State dispensation /government company route, we strongly feel that
private companies should not be given access to Coal Blocks which have been
earmarked for the State dispensation route. Another point raised by the
Screening Committee in its meeting is that WBMDTC had in itself not applied for
allocation of these Coal Blocks. Since WBMDTC is only a subsidiary corporation
under the state government and since the state government as the principal body
has specifically requested for allocation of Coal Blocks to WBMDTC as early as
December 2006 and January 2007, we feel that the issue of WBMDTC having not
itself applied for these Blocks is not relevant. The state government strongly
opposes any allocation of Coal Blocks to any private company particularly those
which are earmarked for State dispensation /government company route.”
The state government
further stated to the central government vide chief secretary’s DO letter No.
107-CS/2008 dated 8th February 2008 that “the state government is fully
conscious of the paucity of coal which is a useful industry raw material and
the need for its optimal utilisation. Accordingly, our whole effort is directed
to providing fillip to the coal mining process simultaneously through WBMDTC
and private efforts, and at the same time, boost the industrial resurgence of
the state.”
VIEWS ON THE NEW
LEGISLATION
In 2008, the central
government came up with a new legislative intent seeking to replace the
existing Mines and Minerals (Development and Regulation) Act, 1957. The state
government vide principal secretary, Commerce & Industries,
Department’s DO letter No. 2247/Pr.S dated 10th August 2009 communicated its
views on the Draft MM (DR) Act 2009. A few changes were suggested. It was spelt
out in the letter that the views of the state government as presented in the
meeting convened by the central government in Delhi on August 10, 2009 would
form part of the suggested changes. Among the views presented by the
representative of the state government attending the said meeting in Delhi, the
following points deserve special mention.
“While competitive
bidding for transparent and rational allocation process is a principle that
cannot be faulted, the proposition neither defines the role of the states nor
safeguards their interests. In fact, with this proposal the legal position,
already tilted in favor of the central government, gets further distorted.
Therefore, the state government urges that the power to invite applications to
grant of mining lease should be devolved on the state government. However,
while doing so, the qualifications of the applicants must be clearly defined
and the bidding process must assign appropriate weights to the investments on
account of value addition, end-use and improvement of infrastructure in the
mineral bearing area.”
It was further
communicated to the government of India that if the government of India
persists with its proposal of vesting itself with the powers in the extant Act
under the proposed amendment, the state government’s serious reservations
against the proposition can be enumerated as given below:
i. The
Screening Committee route confers on the state governments the onus and freedom
of making recommendations on the basis of value additions the end-use
proponents desire to make. Despite the New Mineral Policy actively encouraging
value additions, competitive bidding route will curtail such possibilities
drastically, skewing further the imbalance between exploitation of mining
reserves and captive mining. Needless to say, the two locations of captive
mining and end-use project may not be co-terminus in the proposed regime.
ii. Fast-track
exploration needs, envisioned in the New Mineral Policy 2008 (NMP), would
require simplified procedure to facilitate establishment of mineral reserves
and inventory preparation by deploying state-of-the-art techniques, technology
and equipment. This proposal militates against NMP’s stipulation of involving
the private sector in a scientific and speedy prospecting and exploration
process, given the Standing Committee’s caveat of only explored blocks being put
to such competitive bidding. As per available information out of 17,300 sq. km
of potential coal bearing area in the country, until the end of Tenth Plan,
only 11,865 sq. km area has been regionally/promotionally explored. To cite a
state-specific example, in West Bengal out of the total coal resource forecast
of GSI of 28.32 billion tonnes, only 11.65 billion tonnes are in the proved
category of which so far only 2 billion tonnes has been extracted. The hiatus
between the available geological and extractable/extracted resources is too
large to be ignored.
iii. States
like West Bengal, largely dependent on coal for thermal power generation, may
get left out if competitive bidding is resorted for allocating coal blocks.
iv. The
financial strength of highest bidder would tilt the allocation process in
favour of large companies. This would contravene the need for equity in
allocation to small and medium producers, whose dependence on fuel supply
linkage through public sector utilities would only grow. The ground
experience of poor qualitative and quantitative delivery management by these
utilities especially after introduction of New Coal Distribution Policy 2008
is, however, not very encouraging.
v. Despite
abundance of coal resources in West Bengal, the state is totally dependent on
coal allocation/ linkage of fuel supply by the union coal ministry for its
upcoming new steel projects and ongoing power projects. For both,
its coal requirements can be easily met from existing reserves if the state is
delegated the power of allocation of Coal Blocks located within its
geographical boundaries. Such a step would not only save considerable money and
time involved in allocation, but also substantially cut down the gestation
period of these capital-intensive projects. Likewise, such decision for the
power projects, whose fuel supply linkage is currently being met partly from
ECL coalfields and partly from outside West Bengal, would end the criss-cross
movement of coal, besides huge logistics operations for rail-road movement,
rake availability and supply chain sustenance.
vi. Production
of steel, cement and sponge iron requires higher grade of coal with some
specific properties while for power generation any kind of coal can be used.
Sub-optimal utilisation of higher grade of coal in the competitive bidding
process cannot be ruled out.
vii. The
Standing Committee has rightly highlighted the need for creation of Area
Development Authorities for improving the community welfare and peripheral
development in the mining areas through a special Local Coal Area Development
Authority. Earmarking of funds for this purpose alone would leave the essential
area of social development untouched by the highest bidder, as his priority
would be to focus on maximum extraction in the mining area and maximum
attention to end-use site.
viii. The
experience hitherto gained in captive mining allocation to private end-use
projects does not evoke enough confidence that scaling-up of the process would
accelerate the two processes of coal mining with commissioning of end-use
project in a concomitant and time-bound manner.
It is necessary to
mention that the government of India allocated to the WBMDTC only 6 Coal Blocks
from January 2005 to December 2007 under State
dispensation/ government company route despite repeated request of the state
government to allocate 20 Coal Blocks for meeting the industrial requirements
of the state.
Further, in response to
the DO letter No. F-01/447 dated 7th November 2009 of the minister-in-charge of
the Department of Commerce & Industries, government of West Bengal, the
minister of state (independent charge) of coal, government of India, vide his
DO letter No. 38036/1/2009-CA-I dated 20th November 2009 intimated that “at
present there is no proposal for allocation of Coal Blocks either through
government company dispensation route or Screening Committee route under
consideration of the ministry.” In response to DO letter No. F-01/AD-533
dated 11th November 2009 of the minister-in-charge, Commerce & Industries
Department, Govt of West Bengal, the union minister for coal vide
his DO letter No. 38036/1/2009-CA-I dated 17th December 2009 the views
communicated were no different.
The state government of
West Bengal had, however, been persistent in its efforts for having
the Coal Blocks allocated through State dispensation/ government company route
from the beginning. In his DO letter No. F-01/196 dated 29th March 2010 to the
union minister for coal, the minister-in-charge, Commerce and
Industries, Govt of West Bengal reiterated the same stand but to no
avail. The fact, however, remains that the state government of West Bengal had
never opposed competitive bidding. What it has always insisted upon is that the
‘State dispensation route/government company’ route should not be bartered away
to the private companies in the interests of the states.
People's Democracy, September 02, 2012
