Draft Coal Mines (Special Provisions) Amendment Rule, 2020

Apr 29, 2020 | by Avantis RegTech Legal Research Team


Industry Specific Compliance

The Ministry of Coal on April 13, 2020 has published the draft Coal Mines (Special Provisions) Amendment Rule, 2020 to further amend the Coal Mines (Special Provisions) Rule, 2014.

The following are the amendments made under the Coal Mines (Special Provisions) Rule, 2014:- 

 In Rule 8 related to “Allocation process”, a new sub-rule 8(2)(ba) has been inserted, stating that the Central Government shall issue an order to the nominated authority specifying the purpose of allocation of the coal mine including, but not limited to, own consumption of coal, or for sale of coal.

 Rule 10 related to “Auction”, under which sub-rule 10(3)(a) and (c) have been substituted stating that each tender document may include such information as the nominated authority may consider expedient for the:

• purposes of auction including the purpose of allocation of the coal mine including, but not limited to, own consumption of coal, or for sale of coal; and 

• the terms and conditions associated with the public auction, including the floor price in case of forward auction or the ceiling price in case of reverse auction, reserve price in case of reverse auction, eligibility conditions, the process of conduct of auction and other related information. 

 A new sub-rule Rule 10(b)(C) related to tender process has been inserted stating that the financial bid stage may be divided into such sub-stages or rounds as may be deemed expedient by the Central Government.

 Rule 10(4A), Rule 10(4B) and Rule 10(4C) have been newly inserted with respect to auction.

 Under Rule 11(2) related to “Allotment” has been substituted stating that nominated authority may specify the maximum number of mines or coal reserves or a limit based on any other parameter regarding production of coal or any combination thereof that may be allotted to a company or corporation or its subsidiary or holding company or associate companies or group companies or its affiliate.

 Rule 11(8) has been substituted stating that the nominated authority shall declare the preferred allottee on the basis of the result of allotment process and shall forward its recommendations to the Central Government with regard to the selection of the successful allottee.

 A new sub-rule 11(11) has been inserted, specifying that in cases of allotment of coal mine for the purpose of own consumption of coal where an applicant having a coal linkage becomes the successful allottee, then the entitlement of such successful allottee to receive coal pursuant to such coal linkage may be reduced on such basis as may be specified by the nominated authority in the allotment document.

 After Rule 13(4)(iii) related to “Transition through vesting and allotment”, a proviso has been inserted, stating that in case the allotment is made to a Government company or corporation for utilisation of coal in the linked power project to be awarded on the basis of competitive bid for tariff, the performance Bank Guarantee shall be provided by the operating special purpose vehicle on behalf of the successful allottee after award of power project on the basis of competitive bidding.

 New sub-rule 13(5A), (5B) and (5C) have been inserted, specifying the terms and conditions of the agreement, mine opening permission and performance bank guarantee.

 In Rule 15 related to “Priority of disbursal of proceeds to persons other than the prior allottee”, a new clause 15(c) has been inserted, stating that the proceeds arising out of land and mine infrastructure shall be disbursed priority wise in accordance to the amount payable to the prior allottee in respect of Schedule I coal mine.

 Rule 17 related to “ Re-auction and re allotment”, has been substituted specifying that in case of any coal mine is not allocated or vesting order or allotment order is terminated in respect of Schedule I, the nominated authority shall have the power to re-initiate auction.

 Under Rule 19 related to “Arrangements for optimal utilisation of coal mines”, followings amendments are made:-

• A new clause 19(2)(d) regarding details of coal linkages of the parties is inserted.

• Rule 19(2A) has been newly inserted, stating that the parties shall ensure that all parties to the arrangement or agreement are otherwise eligible for the allocation of the coal mine or grant of coal linkage before applying.

• Rule 19(4A) and (4B) have been inserted, specifying that the party carrying out the mining operations in the coal mine or receiving coal under coal linkage shall bear the liabilities in relation to such coal mine or coal linkage.

• Rule 19(6) has been inserted stating that an allottee to whom the coal mine has been allotted for utilisation of coal in the linked power project awarded on the basis of competitive bid for tariff shall not be entitled to enter into such arrangement or agreement.

Any person likely to be affected thereby by the draft, are requested for objections or suggestions, if any, within 30 days from the date on which the copies of this notification published in the Gazette of India, are made available to the public. The objections and suggestions to these draft rules, if any, may be sent through an email at [email protected], Ministry of Coal, Government of India, Room No. 514/2-D, Shastri Bhavan,  New Delhi-110 001. 

[Notification No. G.S.R. 249(E)]


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