COAL MINES (NATIONALISATION) ACT 1973

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Context: The Supreme Court is hearing a case that challenges the monopoly of Coal India Ltd (CIL) in the coal sector. The case was filed by the Competition Commission of India (CCI), which accused CIL of abusing its dominant position and imposing unfair terms and conditions on its customers.

Details

• The monopoly of Coal India Ltd (CIL) in the coal sector is challenged in the Supreme Court by the Competition Commission of India (CCI), which accused CIL of abusing its dominant position and imposing unfair terms and conditions on its customers.
• CIL has defended itself by claiming that it is exempt from the competition laws because it is carrying out the functions of the state under the Coal Mines (Nationalisation) Act 1973.
  • This Act nationalised the coal industry and gave CIL the exclusive right to produce and sell coal in India.

Coal Mines (Nationalisation) Act 1973

• The Coal Mines (Nationalisation) Act, 1973 was enacted by the Indian Parliament to provide for the acquisition and transfer of the right, title and interest of the owners in respect of coal mines specified in the Schedule.
• The Schedule contained a list of about 711 coal mines located in different parts of the country.

Objectives

• To reorganise and reconstruct coal mines to ensure the rational, coordinated and scientific development and utilisation of coal resources consistent with the growing requirements of the country.
• To vest the ownership and control of such resources in the state and thereby so distribute them as best to subserve the common good and for matters connected therewith or incidental thereto.
• Improving the efficiency, productivity and safety of coal mining operations, as well as ensuring fair wages and welfare measures for the workers.
• Prevent the exploitation of coal resources by private owners and contractors who were accused of mismanagement, corruption and environmental damage.

Key provisions of the act

• The Act declared that it was expedient in the public interest that the Union should take under its control the regulation and development of coal mines to the extent provided in the Act. Under the Act, coal mining was exclusively reserved for the public sector, except for two exceptions:
  • Captive mining by private companies engaged in the production of iron and steel, power, washing of coal or other end uses notified by the government from time to time.
  • Sub-lease for coal mining to private parties in isolated small pockets not amenable to economic development and not requiring rail transport.
• Appointment of a Commissioner of Payments to deal with claims arising out of transfer of ownership, a Custodian to take over or carry on the management of a coal mine, and a Coal Mines Tribunal to adjudicate disputes relating to coal mines.

Some of the major amendments

• In 1976, an amendment was made to allow sub-lease for coal mining to private parties in isolated small pockets not amenable to economic development and not requiring rail transport.
• In 1993, an amendment was made to allow private sector participation in captive coal mining for generation of power, washing of coal or other end uses notified by the Government, in addition to the existing provision for iron and steel production.
• In 2006, an amendment was made to provide for the termination of all privately held coal leases except those held by privately owned steel companies, so that it may be possible for the Central Government, Government Company or Corporation to take mining leases where necessary, after exploration.
• In 2015, an amendment was made to enable the allocation of coal mines by way of auction and allotment for the sale of coal.

Challenges

• The Act has been accused of creating a monopoly for Coal India Ltd (CIL), a state-owned enterprise that accounts for over 80% of coal production in India. CIL has been criticised for its inefficiency, lack of innovation, poor quality control and environmental performance.
• The inefficiency and corruption of CIL and its subsidiaries have resulted in low productivity, high costs, poor quality and frequent accidents.
• The environmental and social impacts of coal mining, such as land degradation, water pollution, displacement of local communities and violation of human rights.
• The lack of competition and innovation in the coal sector has hampered the development of clean coal technologies and alternative sources of energy.
• The legal and policy hurdles in allowing private participation and foreign investment in coal mining have created a supply-demand gap and increased the dependence on coal imports.

Steps need to be taken

• Ensure that coal mining is done in a sustainable manner that minimises the adverse effects on the environment and maximises the benefits for society.
• Facilitate cooperation and coordination among various agencies and institutions involved in coal mining regulation and development.
• Protect and promote the rights and welfare of coal mine workers and affected communities.
• Restructuring and modernising CIL and its subsidiaries, by improving their governance, management, accountability and transparency.
• Enhancing the environmental and social safeguards in coal mining, by implementing strict norms, standards and regulations for environmental clearance, land acquisition, rehabilitation and compensation.
• Promoting competition and innovation in the coal sector, by allowing private players and foreign investors to participate in coal mining under a transparent and fair bidding process.
• Diversifying the energy mix and reducing the dependence on coal, by encouraging the use of renewable energy sources, such as solar, wind and hydropower.

Conclusion

• The Act was a significant step towards the nationalization of the coal industry in India, which was considered vital for ensuring energy security, economic development and social justice. It has served its purpose well for over four decades. However, it needs to evolve with time and adapt to new challenges and opportunities

Must Read Articles:

Coal industry: https://www.iasgyan.in/daily-current-affairs/coal-industry

Report on India’s Coal Mines: https://www.iasgyan.in/daily-current-affairs/report-on-indias-coal-mines

Competition Commission of India: https://www.iasgyan.in/daily-current-affairs/competition-commission-of-india-cci#:~:text=It%20is%20a%20statutory%20body,a%20company%20in%20the%20market.

PRACTICE QUESTION Q. The Coal Mines (Nationalization) Act 1973 was landmark legislation that aimed to bring the coal industry under the public sector and ensure its efficient management and development. However, the act also faced several challenges and criticisms over the years, such as environmental concerns, labour issues, monopoly and corruption. How did the Coal Mines (Nationalization) Act 1973 shape the coal sector in India and what are the key challenges and opportunities for its future reform and growth?

https://www.financialexpress.com/india-news/coal-india-cannot-take-refuge-under-1973-act-cci-in-sc/3082409/