KOLKATA (miningweekly.com) - In a short-term move to give mine Coal India Limited (CIL) access to larger supplies, India’s federal government has asked all provincial governments to hand over surplus coal from captive mines to the national miner.

In a communication to the provincial governments, the Coal Ministry said that in several cases where coal blocks had been allocated jointly to two or more parties, only one had successfully implemented downstream consumption investments.

In such cases, the Ministry has directed that the provincial governments should incorporate the necessary clauses in the lease agreement with allotees, stating that if one party failed to put up downstream projects, excess coal from the blocks should be handed over to CIL.

The Ministry has cited the example of the eastern Indian province of Odisha, where single coal blocks were allotted to several companies, but there were vast disparities among these companies in completing end-use projects. The Ministry said that in such cases, instead of keeping the coal mining capacities idle, production should be maximized and coal transferred to CIL.

The Ministry has argued that this short-term measure would ensure more coal availability of CIL, which accounts for over 80% of domestic supplies, and enable it to speed up conclusion of fuel supply agreements, since delays in these were holding up several thermal power projects across the country.

India’s Planning Commission has been asked by the Ministry to prepare details of the proposed ‘coal bank’ in consultation with other Ministries like Power and Finance, including specifications of coal from captive mines and pricing issues.

In a related development, the Indian government was proposing to incorporate a clause in the planned auction of coal blocks to private user companies, which would prevent the companies from transferring equity in the company until such time that the allotted block was fully in production.

This was aimed at preventing companies from squatting on asset and artificially shoring up valuations of the acquiring company.

Successful companies would, however, be permitted to approach the Coal Ministry if any change of ownership was being considered and the Ministry would either sanction or turn down such proposals on the merit of each case, a Ministry official said.