Coal India Ltd (CIL) has initiated sale of closed/discontinued coal mines via auctions in an attempt to bring them back into operation. It has floated a tender to this effect.
These mines would be leased out on a mine-developer-operator (MDO) model for a period of 25 years or up to proposed lifetime of the mine. The auction would be carried out on revenue sharing mechanism.
For the first phase, the company has identified 20 such mines that are spread across 5 subsidiaries, namely Eastern Coalfields (ECL), Bharat Coking Coal (BCCL), Central Coalfields (CCL), South Eastern Coalfields (SECL) and Western Coalfields (WCL). Extractable reserves of these mines are assessed at around 380 mnt.
Scope of work
The abandoned mine would be awarded to the MDO on ‘as is where is’ basis. This means that the operator would be free to adopt the mining method it wants and can utilize the existing infrastructure and project facilities without paying additional amount.
The extracted coal would be delivered back to the concerned subsidiary for sale.
That apart, pre-mining activities, including scientific studies, acquisition of land and rehabilitation and resettlement would also be done on the part of the MDO.
Bidding process
The eligible participants, after meeting the technical and financial requirements, can take part in the auction by submitting bids in two parts.
The first part will contain the bidder’s covering letter, bid security and information on qualification criteria along with the mining scheme for the proposed coal production schedule.
On the other hand, the second part will specifically comprise the price bid in the form of percentage revenue share, the floor percentage for which is set at 4%.
Bid evaluation would be based on the percentage revenue share and net coal production (considering discount of 10% per annum). The bidder with the highest product value would be considered as H-1 bidder.
In case, there are more than one H-1 bidders, the one having the highest net worth would be declared the preferred bidder.
The last date for bid submission is 2 August, 2022 for BCCL’s mines, 4 August for the mines of ECL, SECL and WCL and 5 August for CCL.
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