Earlier this week, Lok Sabha passed the Bill that provides for the allocation of coal mines that were cancelled by the Supreme Court last year. In light of this development, this post looks at the issues surrounding coal block allocations and what the 2015 Bill seeks to achieve.
In September 2014, the Supreme Court cancelled the allocations of 204 coal blocks. Following the Supreme Court judgement, in October 2014, the government promulgated the Coal Mines (Special Provisions) Ordinance, 2014 for the allocation of the cancelled coal mines. The Ordinance, which was replaced by the Coal Mines (Special Provisions) Bill, 2014, could not be passed by Parliament in the last winter session, and lapsed. The government then promulgated the Coal Mines (Special Provisions) Second Ordinance, 2014 on December 26, 2014. The Coal Mines (Special Provisions) Bill, 2015 replaces the second Ordinance and was passed by Lok Sabha on March 4, 2015. Why is coal considered relevant? Coal mining in India has primarily been driven by the need for energy domestically. About 55% of the current commercial energy use is met by coal. The power sector is the major consumer of coal, using about 80% of domestically produced coal. As of April 1, 2014, India is estimated to have a cumulative total of 301.56 billion tonnes of coal reserves up to a depth of 1200 meters. Coal deposits are mainly located in Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Andhra Pradesh and Maharashtra. How is coal regulated? The Ministry of Coal has the overall responsibility of managing coal reserves in the country. Coal India Limited, established in 1975, is a public sector undertaking, which looks at the production and marketing of coal in India. Currently, the sector is regulated by the ministry’s Coal Controller’s Organization. The Coal Mines (Nationalisation) Act, 1973 (CMN Act) is the primary legislation determining the eligibility for coal mining in India. The CMN Act allows private Indian companies to mine coal only for captive use. Captive mining is the coal mined for a specific end-use by the mine owner, but not for open sale in the market. End-uses currently allowed under the CMN Act include iron and steel production, generation of power, cement production and coal washing. The central government may notify additional end-uses. How were coal blocks allocated so far? Till 1993, there were no specific criteria for the allocation of captive coal blocks. Captive mining for coal was allowed in 1993 by amendments to the CMN Act. In 1993, a Screening Committee was set up by the Ministry of Coal to provide recommendations on allocations for captive coal mines. All allocations to private companies were made through the Screening Committee. For government companies, allocations for captive mining were made directly by the ministry. Certain coal blocks were allocated by the Ministry of Power for Ultra Mega Power Projects (UMPP) through tariff based competitive bidding (bidding for coal based on the tariff at which power is sold). Between 1993 and 2011, 218 coal blocks were allocated to both public and private companies under the CMN Act. What did the 2014 Supreme Court judgement do? In August 2012, the Comptroller and Auditor General of India released a report on the coal block allocations. CAG recommended that the allocation process should be made more transparent and objective, and done through competitive bidding. Following this report, in September 2012, a Public Interest Litigation matter was filed in the Supreme Court against the coal block allocations. The petition sought to cancel the allotment of the coal blocks in public interest on grounds that it was arbitrary, illegal and unconstitutional. In September 2014, the Supreme Court declared all allocations of coal blocks, made through the Screening Committee and through Government Dispensation route since 1993, as illegal. It cancelled the allocation of 204 out of 218 coal blocks. The allocations were deemed illegal on the grounds that: (i) the allocation procedure followed by the Screening Committee was arbitrary, and (ii) no objective criterion was used to determine the selection of companies. Further, the allocation procedure was held to be impermissible under the CMN Act. Among the 218 coal blocks, 40 were under production and six were ready to start production. Of the 40 blocks under production, 37 were cancelled and of the six ready to produce blocks, five were cancelled. However, the allocation to Ultra Mega Power Projects, which was done via competitive bidding for lowest tariffs, was not declared illegal. What does the 2015 Bill seek to do? Following the cancellation of the coal blocks, concerns were raised about further shortage in the supply of coal, resulting in more power supply disruptions. The 2015 Bill primarily seeks to allocate the coal mines that were declared illegal by the Supreme Court. It provides details for the auction process, compensation for the prior allottees, the process for transfer of mines and details of authorities that would conduct the auction. In December 2014, the ministry notified the Coal Mines (Special Provisions) Rules, 2014. The Rules provide further guidelines in relation to the eligibility and compensation for prior allottees. How is the allocation of coal blocks to be carried out through the 2015 Bill? The Bill creates three categories of mines, Schedule I, II and III. Schedule I consists of all the 204 mines that were cancelled by the Supreme Court. Of these mines, Schedule II consists of all the 42 mines that are under production and Schedule III consists of 32 mines that have a specified end-use such as power, iron and steel, cement and coal washing. Schedule I mines can be allocated by way of either public auction or allocation. For the public auction route any government, private or joint venture company can bid for the coal blocks. They can use the coal mined from these blocks for their own consumption, sale or for any other purpose as specified in their mining lease. The government may also choose to allot Schedule I mines to any government company or any company that was awarded a power plant project through competitive bidding. In such a case, a government company can use the coal mined for own consumption or sale. However, the Bill does not provide clarity on the purpose for which private companies can use the coal. Schedule II and III mines are to be allocated by way of public auction, and the auctions have to be completed by March 31, 2015. Any government company, private company or a joint venture with a specified end-use is eligible to bid for these mines. In addition, the Bill also provides details on authorities that would conduct the auction and allotment and the compensation for prior allottees. Prior allottees are not eligible to participate in the auction process if: (i) they have not paid the additional levy imposed by the Supreme Court; or (ii) if they are convicted of an offence related to coal block allocation and sentenced to imprisonment of more than three years. What are some of the issues to consider in the 2015 Bill? One of the major policy shifts the 2015 Bill seeks to achieve is to enable private companies to mine coal in the future, in order to improve the supply of coal in the market. Currently, the coal sector is regulated by the Coal Controller’s Organization, which is under the Ministry of Coal. The Bill does not establish an independent regulator to ensure a level playing field for both private and government companies bidding for auction of mines to conduct coal mining operations. In the past, when other sectors have opened up to the private sector, an independent regulatory body has been established beforehand. For example, the Telecom Regulatory Authority of India, an independent regulatory body, was established when the telecom sector was opened up for private service providers. The Bill also does not specify any guidelines on the monitoring of mining activities by the new allottees. While the Bill provides broad details of the process of auction and allotment, the actual results with regards to money coming in to the states, will depend more on specific details, such as the tender documents and floor price. It is also to be seen whether the new allotment process ensures equitable distribution of coal blocks among the companies and creates a fair, level-playing field for them. In the past, the functioning of coal mines has been delayed due to delays in land acquisition and environmental clearances. This Bill does not address these issues. The auctioning of coal blocks resulting in improving the supply of coal, and in turn addressing the problem of power shortage in the country, will also depend on the efficient functioning of the mines, in addition to factors such as transparent allocations.
So far, both Houses of Parliament have been witnessing disruptions. At the beginning of the session, 23 Bills were listed for passage, and 20 were listed for introduction. Two weeks in, one Bill has been passed by both Houses, and three others by Lok Sabha. These include Bills dealing with the re-haul of consumer protection laws, regulation of surrogacy, and recognition of transgender persons. Six Bills have been introduced. These include three Bills which replace the Ordinances currently in force, and a Bill to regulate dam safety. In this blog, we discuss the key features of some of these Bills.
Enhancing rights of consumers
The Consumer Protection Bill, 2018 replaces the Consumer Protection Act, 1986. It was introduced in view of the significant changes in the consumer market landscape since the 1986 Act. It introduces several new provisions such as enabling consumers to make product liability claims for an injury or harm caused to them, nullifying unfair contracts which impact consumer interests (such as contracts which charge excessive security deposits), and imposing penalties for false and misleading advertisements on manufacturers, as well as on the endorsers of such advertisements.
The Bill also sets up Consumer Dispute Redressal Commissions (or courts) at the district, state, and national level, to hear complaints on matters related to deficiencies in services or defects in goods. While these Commissions are also present under the 1986 Act, the Bill increases their pecuniary jurisdiction: District Commissions will hear complaints with a value of up to one crore rupees; State Commissions between one and ten crore rupees; and National Commission above 10 crore rupees. The Bill also sets up a regulatory body known as the Central Consumer Protection Authority. This Authority can take certain actions to protect the rights of consumers as a class such as passing orders to recall defective goods from the market, and imposing penalties for false and misleading advertisements.
Recognising transgender persons and their rights
Last week, Lok Sabha also passed the Transgender Bill, 2018. This Bill seeks to recognise transgender persons, confers certain rights and entitlements on them related to education, employment, and health, and carves out welfare measures for their benefit. The Bill defines a transgender person as one whose gender does not match the gender assigned at birth. It includes trans-men and trans-women, persons with intersex variations, gender-queers, and includes persons having such socio-cultural identities as kinnar, hijra, aravani, and jogta. The Bill requires every establishment to designate one person as a complaint officer to act on complaints received under the Bill.
The Bill provides that a transgender person will have the right to self-perceived gender identity. Further, it also provides for a screening process to obtain a Certificate of Identity, certifying the person as ‘transgender’. This implies that a transgender person may be allowed to self-identify as transgender individual, but at the same time they must also undergo the screening process to get certified as a transgender. Therefore, it is unclear how these two provisions of self-identification and an external screening process will reconcile with each other.
Regulating surrogacy and overhauling the Medical Council of India
The Surrogacy Bill, 2017 which regulates altruistic surrogacy and prohibits commercial surrogacy was also passed in Lok Sabha. Surrogacy is a process where an intending couple commissions an eligible woman to carry their child. In an altruistic surrogacy, the surrogate mother is not given any monetary benefit or reward, and the arrangement only covers her medical expenses and health insurance. The Bill sets out certain conditions for both the intending couple and the surrogate mother to be eligible for surrogacy. The intending couple must be Indian citizens, be married for at least five years, and at least one of them must be infertile. The surrogate mother must be a close relative of the couple, must be married and must have had a child of her own. Further, a surrogate mother cannot provide her own gametes for surrogacy.
The surrogate mother has been given certain rights with regard to the procedure of surrogacy. These include requiring her written consent to abort the surrogate child, and allowing her to withdraw from the surrogacy at any time before the embryo is implanted in her womb.
Another key Bill which was listed for passage in Lok Sabha this session but could not be taken up is the National Medical Commission Bill, 2017 (NMC Bill). Several amendments to this Bill were introduced in Lok Sabha last week. The NMC Bill seeks to replace the Medical Council of India, with a National Medical Commission. It introduces a common final year undergraduate medical examination called the National Exit Test which will also grant the license to practice medicine. Only medical students graduating from a medical institute which is an institute of national importance will be exempted from qualifying this National Exit Test. The Bill also gives the NMC the power to frame guidelines to decide the fees of up to 50% of seats in private medical colleges and deemed universities. The NMC may also grant limited license to certain mid-level practitioners connected with the medical profession to practice medicine. The qualifying criteria for such mid-level practitioners will be determined through regulations, and they may prescribe specified medicines in primary and preventive healthcare.
Regulating dam safety
The Dam Safety Bill, 2018 was introduced in Lok Sabha and applies to all specified dams across the country. These are dams with: (i) height more than 15 metres, or (ii) height between 10 metres to 15 metres and subject to certain additional design and structural conditions. It seeks to provide for the surveillance, inspection, operation and maintenance of specified dams for prevention of dam failure related disasters. It creates authorities at the national and state level to formulate policies and regulations on dam safety and implement them. It also puts certain obligations on dam owners by requiring them to provide a dam safety unit in each dam, among other things.
When the Bill was being introduced, few opposition members raised objections on the grounds of Parliament’s legislative competence to make a law on dam safety which applies to all states. They gave the example of the previous Dam Safety Bill, 2010, which applied only to the states of Andhra Pradesh and West Bengal who had adopted resolutions requiring Parliament to pass a law on dam safety.
So far the winter session has seen poor productivity with Lok Sabha working for 14% of its scheduled time, and Rajya Sabha for 5%. This is one of the least productive sessions of the 16th Lok Sabha. This is also the last major session before the dissolution of the 16th Lok Sabha. Both Houses will meet tomorrow after the Christmas break. With a packed legislative agenda, it is essential for Parliament to function in order to discuss and deliberate the Bills listed. However, with a limited number of sitting days available in the ongoing session and continued disruptions, it remains to be seen if Parliament will be able to achieve its legislative agenda.
- This post is a modified version of an article published by The Wire on December 26, 2018.
