India Coal Permits
India’s Supreme Court ruled on Monday that over 200 coal permits granted by the government between 1993 and 2009-2011 were illegally allocated, citing lack of accountability and the opaqueness of the process. The bench determined that the screening committee, set up in 1992 for the purpose of vetting private companies for ownership and operation of coal mines, did not follow any guidelines or use any objective criteria for the evaluation of applications. The court further held that the central government lacked the power to allocate coal blocks, a practice which should have been carried out by the states. This ruling comes in the wake of an audit report by India’s federal auditor in 2012 which indicated that the government lost $33 billion by selectively allocating mines to producers rather than holding competitive auctions. Consequences of this decision are unknown at this time, pending further hearings regarding whether previously issued licenses should be removed.
The ruling will likely have a profound impact on India’s already pressing energy concerns, as the stability of coal production is jeopardized, forcing India to increase imports of coal or raise the price of domestic natural gas to incentivize production.