President signs ordinance on e-auction of cancelled coal blocks

President Pranab Mukherjee today signed the ordinance on e-auction of coal blocks, after the union cabinet approved it on Monday - a decision that would help restart the 204 coal blocks whose allocations were cancelled by the Supreme Court last month.

The Supreme Court in its order in September 2014 had cancelled the allocation of 214 out of the 218 coal blocks allocated by the central government to private companies since 1993 (See: Supreme Court cancels allocation of 214 coal blocks, spares 4).

These blocks had been allocated to several companies producing cement, power, aluminium, steel, etc, for captive consumption. However, the Supreme Court has found the process of allocation to be suffering from the ''vice of arbitrariness'' and cancelled the allocation of these blocks. These will now be re-auctioned.

''The actual users of coal in the cement, steel and power sectors who apply for a certain number of coal mines will be put in the pool and there would be an e-auction. A sufficient and adequate number of mines would be put so that actual users go back with the mines,'' finance minister Arun Jaitley had said on Monday, after the cabinet finalized the ordinance.

State sector entities like NTPC or state electricity boards will be allocated coal blocks through the government dispensation route while sufficient coal blocks will be put on e-auction for the private sector players, mostly in the cement, steel and power sectors.

Jaitley had said last evening that the e-auction process will be "transparent" and completed in "three to four months" with proceeds going entirely to the state governments where the mines are located.

The biggest beneficiaries would be the eastern states like Jharkhand, Odisha, West Bengal and Chhattisgarh. States like Madhya Pradesh, Maharashtra and Andhra Pradesh would also benefit.

All companies, except those convicted by courts, will be allowed to participate in the auction and there will be no right of first refusal and all bidders will have to compete in the e-auction through reverse bidding.