Supreme Court scraps 214 coal blocks

On 24 September 2014, in a ruling that could lead to a more transparent system of allocating natural resources, the Supreme Court cancelled all but four of the 218 coal blocks that it had ruled were illegally and arbitrarily allocated and ordered the government to auction them. These blocks had been allocated to steel, power and cement companies for their captive use. SC has ordered the government to auction the coal blocks.

The four blocks that have been spared were allocated to public sector companies SAIL, NTPC and two ultra-mega power projects.

SC also granted the holders of 46 blocks that are operational time till 31 March 2015, to wind up their businesses. However, they will have to pay a fine of Rs 295 for every ton of coal they have extracted so far. These 46 blocks are part of the 214 allocations that the court has cancelled.  This figure of Rs 295 per ton as been arrived at on the basis of the Comptroller & Auditor General’s (CAG) calculation that the exchequer had lost Rs 1.86 lakh crore as a result of the arbitrary allocations.

The coal blocks were allocated between 1993 and 2009 by 13-member screening committees headed by the coal secretary and comprising representatives of State governments, ministries of environment, steel, and railways, among others.

More than half of India’s power is produced by thermal power plants. A chronic shortage of coal is one of the reasons for frequent power outages and the proliferation of environmentally damaging diesel generators.

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