Allocation process was arbitrary, discretionary and non-transparent.
There was no consideration of Merit, no Price discovery mechanism for national resources (Auction is price discovery mechanism).
Further, no ‘minutes of meeting’ were available of screening committee meetings to verify what procedure was adopted by them (every government related meeting needs to prepare Minutes of meeting, which contain discussions, viewpoints, points of disagreements and consensus etc, for transparency and future reference).
To some allocates, blocks were allotted having reserves more than their project needs. Screening Committee relied on data supplied by applicants in arriving at decision.
Law for allocation of natural resources, as upheld by Supreme Court holds that allocation can’t be done in ‘arbitrary manner’. By this same reasoning Spectrum allocation Licenses were cancelled.
Why allotments to State PSU’s were cancelled?
As we have seen that, state PSUs got blocks with no end use restriction. It means they can engage in Commercial Mining i.e. selling coal in open market. But Coal nationalization Law clearly states that commercial mining can be done only centrally owned PSUs. So they were cancelled.
Apart from this some allocations were made to joint ventures of private and public, Joint allocation of Coal Mines to consortium of companies – these were also cancelled.
UMPPs were allowed to transfer coals from or to other project, but Supreme Court held that law disallows this too.
New government has given approval to an ordinance, empowering government to take back mines and reallocating it.
Currently Coal India and other coal suppliers issue ‘letter of assurances’ to their buyers in power sector mainly NTPC, these are on the basis of ‘Milestones’ to be achieved by power producers (milestone of good conduct as buyer).
After achievement of this milestone ‘Fuel Supply Agreement’ is signed between supplier and buyer. Dominantly these supplier and buyers are only government entities; even then there is cumbersome process and mutual hostilities, mainly between Coal India and National Thermal Power Corporation.
In 1993, government created 3 separate ministries (which should be logically 1) I.e. of coal, power and renewable energy respectively. Coal minister and Power ministers held Cabinet Rank. This resulted in awkward situation in which two ministries used to work in opposite direction and which disrupted the speed of clearances, flow of information etc. There were many instances like nonpayment at time by NTPC to CIL due to allegations of low quality supplies kept surfacing. But now as Ministry of Power and coal is headed by one minister, that too minister of state, so much speedy disposal of issues are expected.
