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● A media report in The Economic Times suggests that the panel,
set up to review the legality of ‘go/ no-go zone’ policy for captive
coal blocks, has indicated that the policy does not have any legal
standing and hence should be abandoned.
● The committee has highlighted that the ‘go, no-go’ policy is neither
mandated under the Forest Conservation Rules, 2003 nor under
any circular issued by the Environment and Forests Ministry. The
Ministry of Law and the Attorney General too agree with this view.
● We believe the panel recommendations improve visibility for faster
approvals of the eight captive coal blocks being prioritised. The
panel has also recommended a single-window clearance and
incentives for state forest departments to expedite environment/
forest clearance. Incrementally, implementation of these
recommendations would be positive for the sector in long run.
● Scrapping the ‘go/ no-go zone’ policy would be positive for the
sector in long term, but, coal deficits would continue over mediumterm
as these blocks would still need to apply for environment/
forest clearances; implying coal production would not commence
before 3-4 years. We maintain our cautious view on the sector.
Background of the case
The erstwhile environmental minister, Mr Jairam Ramesh, classified
the coal mining areas into either ‘go or no-go zone’ in 2009. Blocks
classified under the ‘no-go zone’ are in dense forest areas and
expected to be rejected for environmental/ forest clearances. A total of
203 coal blocks are classified under the ‘no-go zone’, cumulatively
having the potential to produce about 660 mmtpa of coal, sufficient to
meet the fuel requirements of about 130 GW of power capacity.
Group of Ministers formed to resolve the issue
In Feb 2011, the Government constituted a committee of 12 ministers
(GoM) from concerned ministries, headed by the finance minister Mr
Pranab Mukherjee, to resolve the ‘go/ no-go zone’ issue. Prior to that,
another committee appointed by the Prime Minister’s Office had
recommended relaxation of the ‘no-go zone’ issue for eight (of total
203) captive coal blocks (refer Figure 1); after considering that
substantial investments had already been made in these projects.
The first two meetings of the GoM (conducted in Feb/ Apr 2011)
remained inconclusive on this issue. During the third meeting in Jun
2011, the GoM supported faster clearances for these eight captive
coal blocks, but it decided to take a final decision on this in its fourth
GoM meeting (was to be held in July 2011, but has been delayed). In
the meanwhile, of these eight blocks, Mr Jairam Ramesh approved
the Parsa East and Kante Basan blocks but denied approval for
Morga-II and Mahan blocks
Panel set up to review legality of ‘go/ no-go zone’ policy
The GoM, in its Jun 11 meeting, also set up a panel headed by Mr B.K.
Chaturvedi (member of Planning Commission) and comprising of
representatives from the ministries of power, coal and finance, to
review the legality and efficacy of existing forest clearance procedures
and submit its recommendations within six weeks.
Panel recommends abandoning ‘go / no-go’ policy
A media report in The Economic Times suggests that the panel has
indicated that the 'go, no-go' policy for captive coal blocks does not
have any legal standing, and hence, should be abandoned. The
committee highlighted that the ‘go, no-go’ policy is neither mandated
under the Forest Conservation Rules, 2003 nor under any circular
issued by the Ministry of Environment and Forests. As per the news
report, the Ministry of Law and the Attorney General also agree with
this view.
Improves visibility on clearance of 8 blocks
We believe the panel recommendations improve visibility for faster
approvals of the eight captive coal blocks (Figure 1), primarily
benefitting projects of Adani Power, JPVL, KSK, Essar Power,
Hindalco and Reliance Power. Besides, the panel has also
recommended a single-window clearance and incentives for state
forest departments to expedite environment/ forest clearance.
Incrementally, implementing these recommendations would be
positive for the sector.
Coal deficit to remain medium term even if policy scrapped
Certainly, scrapping the ‘go/ no-go zone’ policy will be positive for the
sector as it can potentially raise coal production over the long run.
However, even if cleared from the ‘no-go zone’, these blocks would
have to apply for Environment & Forest Ministry approvals. We expect
these blocks to take at least 3-4 years to commence coal production,
even if cleared. Hence, the coal deficit issue is unlikely to be resolved
over the medium term. We maintain our cautious sector view.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● A media report in The Economic Times suggests that the panel,
set up to review the legality of ‘go/ no-go zone’ policy for captive
coal blocks, has indicated that the policy does not have any legal
standing and hence should be abandoned.
● The committee has highlighted that the ‘go, no-go’ policy is neither
mandated under the Forest Conservation Rules, 2003 nor under
any circular issued by the Environment and Forests Ministry. The
Ministry of Law and the Attorney General too agree with this view.
● We believe the panel recommendations improve visibility for faster
approvals of the eight captive coal blocks being prioritised. The
panel has also recommended a single-window clearance and
incentives for state forest departments to expedite environment/
forest clearance. Incrementally, implementation of these
recommendations would be positive for the sector in long run.
● Scrapping the ‘go/ no-go zone’ policy would be positive for the
sector in long term, but, coal deficits would continue over mediumterm
as these blocks would still need to apply for environment/
forest clearances; implying coal production would not commence
before 3-4 years. We maintain our cautious view on the sector.
Background of the case
The erstwhile environmental minister, Mr Jairam Ramesh, classified
the coal mining areas into either ‘go or no-go zone’ in 2009. Blocks
classified under the ‘no-go zone’ are in dense forest areas and
expected to be rejected for environmental/ forest clearances. A total of
203 coal blocks are classified under the ‘no-go zone’, cumulatively
having the potential to produce about 660 mmtpa of coal, sufficient to
meet the fuel requirements of about 130 GW of power capacity.
Group of Ministers formed to resolve the issue
In Feb 2011, the Government constituted a committee of 12 ministers
(GoM) from concerned ministries, headed by the finance minister Mr
Pranab Mukherjee, to resolve the ‘go/ no-go zone’ issue. Prior to that,
another committee appointed by the Prime Minister’s Office had
recommended relaxation of the ‘no-go zone’ issue for eight (of total
203) captive coal blocks (refer Figure 1); after considering that
substantial investments had already been made in these projects.
The first two meetings of the GoM (conducted in Feb/ Apr 2011)
remained inconclusive on this issue. During the third meeting in Jun
2011, the GoM supported faster clearances for these eight captive
coal blocks, but it decided to take a final decision on this in its fourth
GoM meeting (was to be held in July 2011, but has been delayed). In
the meanwhile, of these eight blocks, Mr Jairam Ramesh approved
the Parsa East and Kante Basan blocks but denied approval for
Morga-II and Mahan blocks
Panel set up to review legality of ‘go/ no-go zone’ policy
The GoM, in its Jun 11 meeting, also set up a panel headed by Mr B.K.
Chaturvedi (member of Planning Commission) and comprising of
representatives from the ministries of power, coal and finance, to
review the legality and efficacy of existing forest clearance procedures
and submit its recommendations within six weeks.
Panel recommends abandoning ‘go / no-go’ policy
A media report in The Economic Times suggests that the panel has
indicated that the 'go, no-go' policy for captive coal blocks does not
have any legal standing, and hence, should be abandoned. The
committee highlighted that the ‘go, no-go’ policy is neither mandated
under the Forest Conservation Rules, 2003 nor under any circular
issued by the Ministry of Environment and Forests. As per the news
report, the Ministry of Law and the Attorney General also agree with
this view.
Improves visibility on clearance of 8 blocks
We believe the panel recommendations improve visibility for faster
approvals of the eight captive coal blocks (Figure 1), primarily
benefitting projects of Adani Power, JPVL, KSK, Essar Power,
Hindalco and Reliance Power. Besides, the panel has also
recommended a single-window clearance and incentives for state
forest departments to expedite environment/ forest clearance.
Incrementally, implementing these recommendations would be
positive for the sector.
Coal deficit to remain medium term even if policy scrapped
Certainly, scrapping the ‘go/ no-go zone’ policy will be positive for the
sector as it can potentially raise coal production over the long run.
However, even if cleared from the ‘no-go zone’, these blocks would
have to apply for Environment & Forest Ministry approvals. We expect
these blocks to take at least 3-4 years to commence coal production,
even if cleared. Hence, the coal deficit issue is unlikely to be resolved
over the medium term. We maintain our cautious sector view.
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