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May 27, 2019

SHC sets aside mining permit for over 5,000 acres of coal mines in Lakhra


May 27, 2019

The Sindh High Court (SHC) has set aside the Sindh energy department’s notification with regard to the grant of a permit to the Sindh Lakhra Coal Mining Company (SLCMC) for mining and exploration of coal in over 5,000 acres of land in Lakhra.

The high court directed the Sindh energy department to invite competitive bids and publicly announce them to grant any mining concession in the subject area with proven mining reserves.

The Pakistan Mineral Development Corporation (PMDC) had filed petitions with the SHC against refusal to renew its mining lease and the grant of mining permits to the SLCMC.

The petitioner submitted that its company was working under the administrative control of the federal ministry of petroleum and natural resources while the SLCMC was owned by the Sindh government. The petitioner’s counsel Zamir Ghumro submitted that the PMDC was granted mining lease for area of over 5,000 acres in Lakhra, district Jamshoro, in April 1984 for 30 years.

The SHC was informed that the petitioner had applied for the extension of the contract six months prior to the expiry of the contract in November 2014; however, the energy department rejected the applications for the extension of the mining leases. The counsel submitted that the petitioner’s appeals were pending before the competent authority but the energy department through the impugned notification granted the SLCMC the permit to work in over 5,000 acres of mining area in Lakhra on July 9, 2018, without waiting for the decision of the appeals.

The counsel submitted that coal mined by the petitioner was supplied to the Water and Power Development Authority (Wapda) on subsidised rates, which assisted the federal government in producing less-expensive electricity, and hence a renewal of the petitioner‘s mining-leases was in the public interest.

He submitted that the impugned decision of the appellate authority manifested that the refusal to renew the petitioner‘s mining leases was only for the reason that the petitioner was a federal government entity and the government of Sindh had already made up its mind to award a mining concession in the same area to the SLCMC, a company wholly owned by the government of Sindh. He submitted that the impugned notifications on July 9, 2018, granting mining permits to the SLCMC were issued by the caretaker provincial government which was contrary to its mandate under the Section 230 of the Elections Act, 2017.

Additional Advocate General Sindh Jawad Dero submitted that the petitioner did not have any vested right in the renewal of a mining lease as the energy department was the competent authority to refuse the renewal of a mining lease and to give preference to an entity registered in Sindh such as the SLCMC. He submitted that notwithstanding their respective control with the federal or provincial governments, both the petitioner and the SLCMC were private limited companies and therefore it was wrong on the petitioner’s part to portray the matter as a dispute between the federal government and the government of Sindh.

Dero argued that the grant of mining concessions was not a public procurement with the meaning of Section 2(m) of the Sindh Public Procurement 9 Act, 2009 and therefore the said Act was not applicable to the case, and that the calling of competitive bids under the Rule 68 of the SMC Rules was attracted only for the grant of an exploration licence and a mining lease and not for the grant of a mining permit.

A division bench of the SHC, headed by Justice Syed Hasan Azhar Rizvi, after hearing the arguments observed that the court found no reason to interfere in the discretion exercised by the energy department and the appellate authority of not renewing the mining leases of the petitioner and dismissed the petition with an observation that the energy department was free to take action against the petitioner regarding the possession of the subject area.

The court, however, observed that the impugned notification with regard to the grant of mining permits to the SLCMC was issued in contravention of the law and rules and was liable to be set aside. The court observed that for granting any mining concession in the subject area with proven mining reserves, the energy department shall invite competitive bids by making public the terms and conditions of the mining concession offered.

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