Cancel all licenses, go for auction: govt

The Indian government has asked the Supreme Court to decide quickly on what happens next to more than 200 licenses issued by different governments since 1993.  Last week, the top court said those allocations were illegal but stopped short of cancelling them.

The government's top lawyer, Attorney General Mukul Rohatgi, proposed in court that about 46 of the 218 allocations declared illegal should not be taken back from the companies that operate them as they were either producing coal or were close to producing coal. 

He also said that the government is open to re-auctioning the coal blocks if their allocations are revoked, a stand challenged by an association of coal producers which said that if the mining licenses are cancelled wholesale, firms will have to default on bank loans worth five lakh crores.

The government's awards of the blocks to steel, cement and power companies has been at the centre of  the scandal  dubbed "Coalgate" since 2012 when a Comptroller and Auditor General report in 2012 said the under-priced sales had cost the exchequer up to 1.86 lakh crores.  

The licenses were issued without a transparent bidding process by government committees. 

Analysts have warned a mass cancellation of the blocks would be a worst-case scenario and add to a shortage of coal for power plants. Coal is used to generate more than two-thirds of India's electricity.