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Coal block allocations: Opportunity lost, chaos gained?

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Author(s): Ashok Sreenivas, Rutuja Bhalerao, Saumya Vaishnava Publication Date: December, 2015

Following the Supreme Court judgement of 2014 cancelling the allocation of more than 200 captive coal blocks, the government quickly brought in legislation and began the process of their reallocation. While the new allocation framework is an improvement over the previous regime, it suffers from many potentially serious shortcomings. These include legal ambiguities regarding the method of allocation of mines; regulatory and legal challenges in achieving the expected goals of enhancing coal production and reducing electricity tariffs; and governance challenges in enforcing contracts and monitoring production. In addition, there is significant room for improvement in the provision for competition in auctions, the criteria for allotment, and the transparency of the entire allocation process. These issues need to be dealt with effectively to prevent the sector from heading towards legal, regulatory and economic chaos.

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