NEW DELHI: The coal ministry, in an affidavit to theSupreme Court, has said that it has the sole legal right to allocate coal blocks even as the state governments own the blocks and eventually grant the mining leases.

In response to the query of the apex court, which questioned the ministry’s authority in this regard, thecoal ministry said that though there was no express statutory provision, a combined reading of the Coal Mines Act and a later amendment in the MMDR Act, introducing competitive bidding, gave it the final say in the matter of allocating all major minerals.

The apex Court had questioned the Centre’s right to make allocations, given that the MMDR Act recognisesminerals as state property.

The affidavit, signed by Secretary SK Srivastava, however, made a distinction between the allocation of coal blocks and granting of mining leases by the states. The ministry said that states as owners of their mineral wealth had the sole right to grant leases, but with regard to major minerals, including coal and lignite, they must seek “previous approval of the Central government”. Allocation of a coal block was only the first step towards signing of a mining lease, it said.

A number of important concerns such as environmental impact clearances, adoption of scientific mining practices and optimal utilisation of coal resources get addressed at stages subsequent to allocation of coal blocks by the Central government, the ministry said.

A combined reading of the Coal Mines (Nationalisation) Act, 1973 and the amendment made to introduce competitive bidding, otherwise not provided for under existing mining laws, protects its right, it said. The amendment to the MMDR Act was brought in to address the concern that “no express statutory mandate empowered the central government to make allocation of coal blocks”.

PWC executive director (energy utilities business) Kameswara Rao backed the ministry’s view, adding one could always quibble about terminology. “States can offer their support for specific end uses. Actual allocation is a different thing,” Rao said, adding that in practice it has come to be done by the Centre and the objections of the state concerned are usually taken care of.

Rao blamed the contentious debate over the powers of allocation to failure of reforms “upstream” to keep up reforms “downstream”. He gave the example of electricity reforms started in 2003. Tariff policies and competitive bidding came much later in 2006, giving rise to similar issues, he said.

Dipesh Dipu, founder partner of Jenissi Management Consultants, said that the Centre’s powers did take away from the state’s powers but it was not a complete subversion of the process.

Courtesy: The Economic Times