New Delhi: Stating that cancellation of coal blocks will shake investors' confidence, industry body Assocham has suggested a two-pronged strategy as a remedial measure on the issue.
The strategy entails that companies which have set up manufacturing plants after allocation of coal blocks may be allowed to continue in accordance with the mining lease entered into with the state governments.
Alternatively, where the mining operations have actually started, the same may be allowed to continue and in those cases where approvals/licenses have been granted or either the mining plan is yet to be approved or the mining lease is yet to be entered, a committee may be constituted to examine on a case-to-case basis and the committee shall recommend whether or not the allocation is to be sustained or cancelled.
“An extreme step, such as en-masse cancellation of allocations shall adversely impact the legitimate interest of investors who participated in good faith in processes laid out over an extended period by the governments of the day, of course, in cases of proven mala fide, the law must take its own course,” Assocham said.
“The cancellation of coal blocks will severely shake the confidence of domestic and foreign investors, loans from banks and financial institutions to the extent of Rs. 3 lakh crore will become non-performing assets (NPAs) and estimated investment of Rs. four lakh crore will be threatened,” it added.
The Supreme Court recently held that all coal block allocations made since 1993 till 2010 have been done in an illegal manner by an “ad-hoc and casual” approach “without application of mind”.
The apex court said that further hearing was needed to determine the consequences for which it would hear the matter on September 1.
“This will not only avoid undue hardship to the mine operators but also protect the interest of the lenders and the public at large as absence of coal shall directly affect the production of steel, cement and power, all of which are drivers of the economy,” the chamber said.