The Ministry of Coal (MoC) has cancelled the coal mine development and production agreement (CMPDA) issued for the Majra and Chinora blocks in Maharashtra.
Both these blocks, having combined geological reserves of 48.88 mnt, were acquired by BS Ispat Limited (BSIL) in the commercial mining auctions. The Majra block was secured at a final price of 18.25% in the third tranche, while Chinora was booked at 53% in the fourth tranche.
As per the tender document, the awardee was required to pay installment for upfront amount along with performance security upon the execution of CMPDA.
However, attempts made by BSIL to comply with the allotment norms were found inadequate as it failed to execute these payments within the stipulated time period. Ultimately, this led to the termination of the allotment order. In addition, the part payment submitted by the company was also fortified.
On similar grounds, the allotment of the Burakhap coal block was also terminated earlier this year.
Dent to commercial mining prospect
In India, where state-run miners – Coal India Ltd (CIL) and Singareni Collieries Company Ltd (SCCL) – account for around 85% of the total coal production, the government had launched the commercial mining auctions to augment production by encouraging private participation.
The policy was also made lucrative by the introduction of various features such as revenue sharing model, full flexibility in coal utilisation, optimised payment structures and provision of incentives in case of early production and use of cleaner technologies.
However, the efforts have been marred by the dwindling response from participants and slow development of the allocated blocks.
Over the five tranche of auctions that have been concluded so far, where close to 200 coal blocks were put on sale, a total of 64 blocks were sold, including the three cancelled blocks. Of these, only two blocks have started operation.
Nevertheless, unfazed by the recent setback, MoC is carrying out these auctions in full swing with the aim to augment domestic coal availability to mitigate costlier imports.
In a latest attempt, the ministry has launched the sixth tranche of commercial mining auctions by putting on sale a record number of 133 blocks. For this round, the due date for bid submission is 26 December post which the financial bidding auction will commence from January next year.
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