Calcutta | Jun 25, 2015: The coal ministry will soon come up with guidelines that will help state government entities to select a mine developer and operator (MDO) for coal blocks secured through allocation.

State government-owned power generation utilities such as West Bengal Power Development Corporation in Bengal had earlier formed joint venture companies with a private firm because they lacked expertise in mining coal.

But under the Coal Mines (Special Provisions) Act, 2015, the government entities, which secured coal blocks through allocation, are not allowed to transfer any part of the ownership in favour of a third party in case of joint ventures. These firms can select an operator to facilitate the mining of coal from the blocks allotted to them.

Coal secretary Anil Swarup said the coal ministry has prepared a draft guideline to help the state government entities select their MDOs.

"So what we are trying to do is work out a broad draft document which could be used by the state governments. This is now with the law ministry and they are examining the legal aspects of it," said Swarup on the sidelines of an interactive session at Bharat Chamber of Commerce.

Industry sources said that even as blocks have been auctioned, there is a delay in lifting coal from these blocks on account of obtaining various clearances.

Swarup, however, said that the process would speed up in the coming month.

"Whenever there is a disruption, there will be some problem. But the good news is that five mines are already mining and within a month another 10-15 mines will start mining. I am personally travelling to the states and sitting with the chief secretaries to solve the problems," he said.

Swarup said the critical issue that the government was trying to address is evacuation of coal through railways.

"There are three critical railway lines - in Odisha, Jharkhand and Chhattisgarh - which have been hanging for the past few years. Once these lines come through, about 200-300 million tonnes of additional coal will get evacuated. We are working in tandem with the railways," said Swarup.

The coal secretary further said the government was also considering allocation of coal mines to the state government entities for specific end use.

"In principle the government does feel the need to provide coal to the small scale sector. That segment is somehow getting ignored in the coal block auction. Coal India is too big an entity to supply coal to these sectors. If we provide coal block to a state, they in turn mine and give coal to its own entities," he said.

Swarup added that the government would want Coal India to keep prices low to facilitate affordable power tariff for consumers. "The Centre owns a majority share. So in the board we convey the concerns that in order to keep the tariff down, they will have to keep the price of coal down."

(Source: http://www.telegraphindia.com/)