The central government that has recently opened doors for commercial mining of coal by removing end-use restrictions and as per the latest updates it is going to initiate first round of sale of coal blocks in the ongoing fiscal year of FY20.
The Ministry of Coal has released a discussion paper mentioning the draft rules for commercial coal auctions yesterday i.e. on 15 Jan’2020. According to the draft rules, there shall be no restriction on the sale or utilisation of coal from the coal mine and the successful bidder shall be free to sell coal in any manner and utilise coal for captive consumption and export.
Eligibility: A company or a joint venture company incorporated in India is eligible to participate in commercial coal auctions.
Bid Parameter: The bidders would be required to bid for a percentage share of revenue payable to the Government. The floor price shall be 4% of the revenue share. Bids would be accepted in multiples of 1% of the revenue share till the percentage (%) of revenue share is up to 10% and thereafter bids would be accepted in multiples of 0.50% of the revenue share.
Auction Process: The auction would be conducted on an electronic platform through a two stage process comprising of:
- a) Technical Bid in which the Bidders would be required to provide details regarding compliance
with the Eligibility Conditions; and
- b) Financial Bid comprising of: (i) the Initial Price Offer (IPO); and (ii) the Final Price Offer (FPO).The IPO shall be above the floor price.
Limitation on number of Bids: A Bidder shall submit only 1 (one) bid for a particular coal mine. No Affiliate(s) of such Bidder shall submit a bid for the said coal mine. In case an Affiliate(s) of a Bidder also submits a bid for the said coal mine, the bids submitted by the Bidder and its Affiliate(s) will be rejected.
Mines up for sale:
The government has released a list of 74 mines which it plans to auction under commercial mining. Among the coal mines being put up for auction are Anesttipali in Telangana; Chhendipada, Mahanadi and Kuraloi North in Odisha; Ashok Karkatta in Jharkhand and Jagannathpur in West Bengal.
The ordinance approved by the Cabinet last week also enables auction of unexplored and partially explored coal blocks for mining through prospecting license-cum-mining lease. These steps are expected to result in opening up of the coal sector completely for commercial mining to local as well as global firms. This would further boost economic growth and employment generation.
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