Indian Coal Ministry in accordance with the rules depicted under Coal Mine Development and Production Agreement (CMDPA), has revised the price offer for coal extracted from the allocated mines during FY19.
The monthly payment towards the mined coal volume for FY19 would be made on the basis of escalated final price offer.
It is pertinent to note here that the successful bidders are required to make monthly payment for the extracted coal volume on the basis of final price offer, at which the vesting order for the mine was attained. Such payment is required to be made within 20 (twenty) calendar days of expiry of each month with respect to coal extracted from the Coal Mine in the previous calendar month.
The aforementioned payments are, however, subjected to a yearly adjustment (upward or downward, as applicable) on the basis of Wholesale Price Index (WPI), and the monthly payment stands increased by the percentage increase of the WPI on a y-o-y basis.
Notably, percentage increase in WPI for FY19 came out as 3.62, assessed for WPI of 117.3 in Apr’19 against WPI of 113.2 in Apr’18. The escalated final price for 18 coal mines accessed on the basis of WPI, are enumerated below.
| S. No | Name of Mine | Successful Bidder | Final Offer for FY18 | Escalated Final Offer for FY19 |
| 1 | Gare Palema IV/5 | HINDALCO | 3665.8 | 3798.5 |
| 2 | Chotia | BALCO | 3166.49 | 3281.12 |
| 3 | Bicharpur | UltraTech Cement | 3143.46 | 3257.25 |
| 4 | Gare Palema IV/4 | HINDALCO | 3141.37 | 3255.09 |
| 5 | Kathautia | HINDALCO | 2993.78 | 3102.15 |
| 6 | Lohari | Araanya Mines Ltd | 2552.04 | 2644.42 |
| 7 | Gare Palema IV/8 | Ambuja Cement | 2398.16 | 2484.97 |
| 8 | Ardhagram | OCL Iron & Steel | 2330.83 | 2415.21 |
| 9 | Dhumri | HINDALCO | 2226.49 | 2307.09 |
| 10-11 | Brinda & Sasai | Tata Sponge Iron | 1888.38 | 1956.36 |
| 12 | Belgaon | Sunflag Iron & Steel | 1868.5 | 1936.14 |
| 13 | Moitra | JSW Steel | 1582.72 | 1640.01 |
| 14 | Sial Ghori | Reliance Cement Company | 1467.58 | 1520.71 |
| 15 | Marki Mangli-III | B S Ispat | 960.94 | 995.73 |
| 16 | Meral | Trimula Industries | 761.01 | 788.56 |
| 17 | Marki Mangli-I | Topworth Urja & Metal | 748.02 | 775.1 |
| 18 | Nerad Malegaon | Indrajeet Power | 690.87 | 715.73 |
Source: Coal Ministry
Prices in INR/MT
All the mines mentioned above were allocated to the non-regulating sector pertaining to Iron & Steel, Cement and Captive power industries, which have to make payments in terms of INR per tonne for the coal being extracted during FY19.
Highest coal price was assessed from Gare Palema IV/5 mine owned by Hindalco Industries, followed by Chotia, Bicharpur and Gare Palema IV/4 mine. The preference for a particular mine generally depends upon the geographical reserve and the assessed coal grade.
Cost associated with the extraction of coal add-on to the vows related to the operational requirements needed to set up a mine, failing to which the Coal Ministry holds the right to terminate the vesting order of a non-performing miner, as was the case with Tosikud North coal mine.
The country had witnessed a slack demand in procuring coal mines from the underlying auction process in recent times, wherein all the previous four rounds of coal mine auction were annulled.
Since the beginning of FY16, the Coal ministry has managed auction of only two coal blocks namely, Marki Mangli-I and Majra.
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