Give first right of refusal to affected companies, says former coal secretary Parakh

Cancellation of 214 coal blocks allocated between 1993 and 2008 may have widespread ramifications for the economy and should be re-allocated immediately, experts said.

Former coal secretary P C Parakh told dna, "This is indeed a tough decision, but it was widely anticipated also. The government should now ensure that the reallocation of cancelled blocks should be done immediately to avoid any negative impact on the economy."

To expedite the reallocation process, Parakh suggested the government give first right of refusal to the companies that have already got the blocks.

"In case of the rebidding, if the existing company matches the bid of the highest bidder, he should be allowed to retain the project. In a sense, the existing company should be given the first right of refusal. One has to consider the fact that most of the companies have done the required leg work," said Parakh.

With last August's rupee crisis fresh in the mind, the finance ministry will also closely monitor the impact of the decision on the forex market.

A senior finance ministry official told dna, "As per our estimates, an additional Rs 18,000 crore will be added to the coal import bill, which has the potential to affect the rupee-dollar balance. We would not like to have last August like situation. We will be assessing the impact." As of now, the country is in a comfortable current account deficit situation.

A former cabinet minister, who did not wish to be named said, "There will be an impact on the prices in the international coal market also if India goes with such huge demand for coal. Also are our ports prepared to support additional coal imports?" Paradip port is already crowded with about 27 ships loaded with coal lying stranded there.

The additional coal imports would also jack up pressure on coal prices, the official said.