SC scraps 214 coal block allocations, 4 untouched
Companies whose allocations were cancelled will have to return blocks by March 31, 2015. Unhappy India Inc points to power shortfall, increase in coal imports and slowing down of economic growth
New Delhi In a tougher-than-expected ruling, theSupreme Court on Wednesday scrapped all but four of 218 coal blocks allocated by the government over the past two decades. The SC judgement caused a sharp fall in value of shares of companies that have invested heavily in projects around the concessions.
Most power, steel and cement companies that won blocks will have until end-March to return them, and the government then plans to auction them off. The ruling is a major blow to the corporate sector, which claims to have invested around Rs 2 lakh crore in them.
A bench headed byChief Justice R M Lodha saved four blocks -- one each with NTPC and SAIL each and two allocated to Ultra Mega Power Projects -- from being cancelled.
The apex court also took note of the stand taken by the NDA government that it is “fully prepared to face the socio-economic impact” if the allocations were cancelled. During an earlier hearing, the UPA govt had opposed cancellation of coal block allocations saying around Rs 2 lakh crore had been invested by various companies after the blocks were allotted to them.
The top court had on August 25 held that all coal block allocations since 1993 have been made illegally and arbitrarily. The apex court, which had used almost all terms to condemn the procedures adopted by 36 screening committee meetings since 1993, however, had stopped short of cancelling them saying “what should be the consequences, is the issue which remains to be tackled.”
BANKS GET JITTERY
The mass cancellation of coal block allocations has sent jitters among banks as they have extended loans of over Rs 1 lakh to power plants fuelled by these mines. While bankers were unwilling to go on record on the impact of the ruling, sources said lenders were assessing their exposure to the cancelled mines.
“We are glad that this is over with the SC verdict on coal block allocations. We now look forward for a quick plan of action for ensuring that coal supplies are not disrupted and thereafter a swift and transparent bidding process for reallocation,” SBI chairperson Arundhati Bhattacharya said. Yes Bank Managing Director Rana Kapoor said his bank’s exposure is minimal. “As the the court has said that coal supply would be maintained to the power plants, therefore there would not be too much of an adverse impact on banks,” he said.
Ruling may hit economy:India Inc
The apex court’s ruling will cause serious supply disruptions and accentuate the power crisis, and is likely to impact the economy by jeopardising investments in the sector, India Inc said. “The decision taken by the Supreme Court to cancel all but four coal blocks is likely to adversely impact the domestic coal supplies in the country and will erode investor confidence,” CII President Ajay Shriram said.
Currently, about 42 blocks are producing coal to the tune of 53 million tonnes and account for 10 per cent of the total coal supplied in the country.
New Delhi In a tougher-than-expected ruling, the
Most power, steel and cement companies that won blocks will have until end-March to return them, and the government then plans to auction them off. The ruling is a major blow to the corporate sector, which claims to have invested around Rs 2 lakh crore in them.
A bench headed by
The bench also directed the companies, which were allocated coal blocks but had not begun operating them, to compensate the government for the loss to the exchequer to the tune of Rs 295 per tonne as per the findings of the Comptroller and Auditor General (CAG).
The apex court also took note of the stand taken by the NDA government that it is “fully prepared to face the socio-economic impact” if the allocations were cancelled. During an earlier hearing, the UPA govt had opposed cancellation of coal block allocations saying around Rs 2 lakh crore had been invested by various companies after the blocks were allotted to them.
The top court had on August 25 held that all coal block allocations since 1993 have been made illegally and arbitrarily. The apex court, which had used almost all terms to condemn the procedures adopted by 36 screening committee meetings since 1993, however, had stopped short of cancelling them saying “what should be the consequences, is the issue which remains to be tackled.”
BANKS GET JITTERY
The mass cancellation of coal block allocations has sent jitters among banks as they have extended loans of over Rs 1 lakh to power plants fuelled by these mines. While bankers were unwilling to go on record on the impact of the ruling, sources said lenders were assessing their exposure to the cancelled mines.
“We are glad that this is over with the SC verdict on coal block allocations. We now look forward for a quick plan of action for ensuring that coal supplies are not disrupted and thereafter a swift and transparent bidding process for reallocation,” SBI chairperson Arundhati Bhattacharya said. Yes Bank Managing Director Rana Kapoor said his bank’s exposure is minimal. “As the the court has said that coal supply would be maintained to the power plants, therefore there would not be too much of an adverse impact on banks,” he said.
Ruling may hit economy:India Inc
The apex court’s ruling will cause serious supply disruptions and accentuate the power crisis, and is likely to impact the economy by jeopardising investments in the sector, India Inc said. “The decision taken by the Supreme Court to cancel all but four coal blocks is likely to adversely impact the domestic coal supplies in the country and will erode investor confidence,” CII President Ajay Shriram said.
Currently, about 42 blocks are producing coal to the tune of 53 million tonnes and account for 10 per cent of the total coal supplied in the country.
