The ministries of energy and law are now at loggerheads over adoption of the national coal policy that would determine the fate of foreign investment proposals worth around $ 5.0 billion.
The law ministry last week held up its much-expected clearance for the draft national coal policy that the energy ministry prepared after years of hard work, a senior energy ministry official said.
"The law ministry has advised the energy ministry not to adopt any policy but to draft an act to help the process of coal extraction," energy secretary Mohammad Mohsin told the FE Saturday.
The law ministry's recommendation to adopt an act instead of a policy, however, poured water on the energy ministry's efforts to get a national coal policy in place.
The energy ministry during last several years was busy in preparing the national coal policy and kept investment proposals worth several billion of dollars on hold.
Contradicting the law ministry's recommendation, the energy secretary told the FE Saturday that an act was necessary for a specific issue. But, he said, the energy ministry has been working on a coal policy to ensure development of the coal sector as a whole.
"The energy ministry will decide on the law ministry recommendation soon," Mr Mohsin said.
Sources said the energy ministry has done nothing to amend the existing Mines and Mineral Rules 1968, which the law ministry thinks, need to be amended to ensure development of the coal sector.
The law ministry in their observations also pointed out that some sections of the draft coal policy would contradict the existing rules. For instance, it said, the draft national coal policy provides for giving licences for exploration or extraction work in any coal-field through open tenders whereas the existing rules say that the licences would be awarded on first-come-first-served basis.
Besides, the draft policy says that a proposed coal sector development committee will fix the royalty rate whereas the mining rules say that the royalty on coal extraction would be 6.0 per cent for open-pit mining and 5.0 per cent for underground mining.
The companies anxiously waiting for the adoption of the coal policy for their investments include UK-based GCM Resources (formerly known as Asia Energy), Indian business conglomerate Tata group, South Korea's Luxon Global and US-based Global Vulcan Energy.
Pending investment proposals with the Board of Investment (BoI) include a $2.5 billion project from GCM Resources, a $1.6 billion venture from Global Vulcan Energy, a $1.5 billion investment from Luxon Global and a portion of the Tata's $3.0 billion proposal.
Among the foreign companies GCM Resources proposed in October 2005 the development of an open-pit coalmine at Phulbari with the installation of a 1,000-MW mine-mouth power plant.
